As the world woke up on 24th June 2016 to the news that Britain had historically voted in the majority to leave the EU, many felt joyous and victorious, while others got a sinking feeling of despair and even panic.
Chief amongst the ‘Remain’ camp’s fears were the supposedly inevitable housing crash. Property values would drastically fall, leaving many in negative equity, in echoes of the 2008 worldwide financial crisis.
Three months on, how does the UK housing market look? And have the experts changed their tune?
Supply and demand
Last week, Persimmon, Britain’s second largest housing developer announced they’d sold over 7,000 homes in the last 6 months – with prices 6% higher. Clearly the experts’ warnings haven’t gotten through to these enthusiastic buyers! Maybe Michael Gove was right, and the general public really have had enough of listening to experts?
It doesn’t seem like Britain’s decision to leave the EU has done anything to ease demand on already stretched housing stock. And with people starting to take advantage of recent buyers’ incentives like the Help to Buy ISA, it shows no signs of slowing down this year.
House prices up
Even the experts have started to back down on their predictions. The Royal Institute of Chartered Surveyors (RICS) said house prices are expected to rise 3.3% a year on average, for the next five years.
This is down from the approximately 10% annual increase in price we’ve seen over the last few years, and lower than RICS’s start of year predictions of a 4% increase.
Simon Rubinsohn, RICS’s chief economist, said: ‘There are clear signs that the housing market is settling down after the initial surprise of the outcome to the EU referendum. Buyer enquiries did dip again in August but only modestly, and more significantly, sales expectations are beginning to edge upwards once again’.
Sales pick up
In more positive news, sales are expected to increase over the coming months too. While mortgage approvals dropped in July following the referendum decision, this has now started to stabilise.
Capital Economics’s Hansen Lu is positive, saying there are ‘increasing signs that the initial post-referendum shock has begun to recede… With the recent economic news taking a more positive tone, it looks increasingly likely that the housing market will avoid catastrophe.’
Nothing to fear?
All of this isn’t to say you shouldn’t still be cautious if you’re a homeowner or thinking about buying.
Even though there’s been minimal impact on the UK economy since the June decision, Article 50 has yet to be triggered, and a deal on leaving the EU has yet to be proposed, never mind agreed. Whatever decisions are made could still have huge financial implications for the country.
Ultimately, it comes down to the simple fact no one’s really sure what’s going to happen. But for now, things seem less bleak than they appeared for the housing market on 24th June. Who’s to say what the near future will hold?
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