What will the housing market look like post-Brexit?
As you're probably well aware, in June the UK voted to leave the EU. Now, this means a lot of things are going to be uncertain for the next months and even years, and there are now more and more people who are speculating as what exactly will be happening in the future of a post-Brexit world.
The housing market is no exception to the Brexit speculations. To help you get a good understanding of what exactly is going on, we've decided to do some investigation and gathered views from house market experts from around the UK, and here's what we found.
An affordable London?
London isn't cheap; it's a pretty well-known fact these days. However this could be changing soon, as according to some speculators housing prices in London may begin to shift the other way and might even become more affordable. According to a recent study done by The Standard, there was an increase in failed sales since June 23rd with some reports even showing a 12% drop. A more revealing statistic is that price drops went up 163% within just 12 days of the referendum.
At first glance, a more affordable London may sound like good news for some people, but unfortunately it's not necessarily the best thing. With more buyers becoming more reluctant and are subsequently withdrawing from home purchasing, sellers are having a harder time selling their homes and therefore have to lower home prices. It may still be too early to make a definitive call as to whether or not this trend will continue or even maintain indefinitely, but the housing market in London is certainly something to keep a watch on in the coming months.
What about the current housing shortage?
Although London might be becoming more affordable, the whole of the UK might become more expensive in the months and years to come. With the current housing shortage crisis, the government even pledged last year to build one million homes by 2020. Already behind this target, some speculators are fearful of an even bigger slowdown in home construction.
What's more is that some of the nation's biggest house builders have already voiced that their supply chains may slow down, which would put them well behind their schedules. With fewer homes already available, we may begin to see home prices increase due to the shortage of them available.
With many things, nothing's for certain, but this is another hot topic to keep your eye on as the months go on in a post-Brexit economy.
How will lowered interest rates affect the market?
In early August, the Bank of England announced that it will cut interest rates to a record of 0.25% in hopes of boosting the UK economy after the June referendum. This means a couple of things for current homeowners. For those with tracker mortgages (mortgages whose repayment rate tracks the interest rates) benefit from this cut since their monthly payments may decrease. With one in five mortgage holders having tracker mortgages, the lowered interest rates come as some good news for some UK homeowners.
Something that many speculators are still unsure of is what will happen with home loans on the standard variable, and for most it'll be up to the individual lender. Providers and lenders may decide to pass the cut on in full, others may decide to pass on a partial cut and some may not even make any changes as the interest rates are at a historical low.
Predictions for the rest of the year
Overall, the majority of the housing market speculators are still uncertain as to what exactly may happen in the next several months and even year with the post-Brexit economy. Some think that the referendum has had an overall less severe influence than what many were thinking would happen, but many others also point out that they're still waiting for the dust to settle. Something that is for certain, however, is that the house sector is something that will be watched carefully in the coming months.