uk housing market crash

In the past months, news articles regarding the UK economy have been circling around. These stories are a big factor in causing a continued downturn in UK house prices. Brexit, for one, is causing uncertainties among potential buyers but will it be enough to cause a massive property downturn? 

Factors That May Cause UK Housing Market Crash

Supply and Demand

At present, a number of buyers are willing to buy properties in the UK but there are just too few houses they can choose from. For the past years, only a few houses were built and listed for sale. Ideally, this increased demand and low supply should cause prices to skyrocket. This shortage, however, is not causing prices to increase since only a few people can afford them. With the low supply, increased demand, and decreased ability to pay, house prices instead go down. 

Increased Mortgages and Interest Rates

For now, mortgages are still stable. This helps in keeping house prices static. Looking ahead, this may drastically change once the Bank of England raises interest rates. This speculation is expected to occur especially since inflation rates continue to rise. Sharp rises in interest rates will mean homeowners will have to pay steep increases in mortgage repayments. This difficulty in repayment is enough to cause house prices to continually drop similar to what happened during the early 1990s recession. 

The difference from the early 1990s recession and today is that only a few people have mortgages. Most of the buyers now own their homes outright instead of loaning it from the bank.

Buyer Confidence

Whilst often overlooked as a contributing factor in house price changes, buyer confidence is quite influential. When buyers have higher confidence, they will part with their money easily and invest it. Likewise, when it is low, they would not risk and hold on to their money instead. When this happens, the economy will weaken. 

Brexit decreases this buyer confidence, not only in the property market but in the economy as a whole. 


It remains one of the major factors that may cause the UK housing market to crash. This event has allowed property buyers and creditors to look at the fundamental value of a home. The UK market is yet to bounce back from the 2008 recession and Brexit added fuel to the fire. In general, the housing market has been volatile but it can get worse when prices start to drop further in the coming years. 

Uncertainty in the market is putting its toll on the homeowners, particularly when making a decision whether they should hold on to their property, sell and cut losses, or take out a mortgage and buy a property. 

For eight consecutive quarters, London house prices dropped continually, pushing home values to drop by 2.6% in the past two years. Data from Nationwide shows London and the southeast areas have performed poorly in the past three months. Home prices in London are expected to depreciate as worries of Brexit continue to affect the market. Much of this drop in prices is felt by luxury property owners. 

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