What impact did Brexit really have on the UK property market?
It has been more than five years since the referendum on the UK’s membership of the European Union (EU) and the concerns about Brexit have rarely left the news in that time. Even today, no one can be completely certain about what the long-term effects will be. UK residential property is one sector which has been the subject of particularly intense scrutiny, with many wondering what effect Brexit will have on the market.
People were justifiably concerned about house prices falling in the run up to the referendum – not least the Chancellor of the time, George Osborne, who warned the nation that voting to leave the EU could send house prices tumbling by as much as 18%.
The theory was that nobody knew what they were voting for, and that the uncertainty and many unknowns would lead to a catastrophe as people simply stopped spending money on big ticket items like property. The terms of any future deal were not even vaguely defined at that point, and hard times were seen on the horizon.
The National Association of Estate Agents was one such voice predicting difficulties ahead, with its Managing Director Mark Hayward stating in 2016: “As a result of the vote for a Brexit, we expect international investors to look a lot harder at the UK as a potential market to buy in and this will have a knock-on effect on the house building sector, as investments may be delayed or put off completely”.
However, these fears would turn out to be unfounded. Indeed, the UK property market has only gone from strength-to-strength since the Brexit process began and there is no sign of the good times slowing down in the future.
Figures from the Office for National Statistics demonstrate in black and white how the market has grown in the last five years. The government body reported that the average UK house price was ￡212,887 in June 2016, the month of the referendum. By May 2021 (the latest figures available), the average UK house price had risen to ￡255,000.
While the initial concerns about economic insecurity causing a fall in house prices were valid at the time, it is clear with hindsight that it was this very uncertainty which made UK property more appealing than ever before.
Property is seen as a safe port in a storm, a tangible investment that is more likely to hold its value in the long-term than alternatives like stocks and shares. During periods of economic transition, there is no safer bet than property – a fact which is true for both homeowners and buy to let investors.
At the same time, the UK’s imbalance between supply and demand has continued to become more severe. Every year, the deficit between the number of homes needed and the number actually built grows by a further 100,000 homes according to the latest government figures. The National Housing Federation has stated that at least 340,000 new homes are needed a year until 2031, but current rates of housebuilding get nowhere near that figure.
That creates a huge level of demand which is pushing house prices up and has contributed to UK property becoming an even more appealing prospect in an uncertain post-Brexit economy. Combine that with a historically low interest rate of 0.1% from the Bank of England and you get a reliable, appreciating asset in an economic environment where you can borrow cheaply.
The cumulative positive effects of Brexit on the housing market are set to continue into the future as well. The latest Residential Forecast from Savills shows that further house price inflation of 21.5% is expected across the UK by 2025, with regions such as the North West expecting growth as high as 28% over that same period. Why not take a look at our Manchester properties.
The UK property market has defied Brexit uncertainty and continued to flourish, with conditions perfect for even more growth in the future. Get in touch with our team today for more information about our high-yielding UK property opportunities.?