The 29th of March marked a revolutionary day for Great Britain. Article 50 of the Treaty on European Union was triggered for the first, and so far, only time by Theresa May. It was a movement met with both joy and regret from people across the country with many apprehensive about an uncertain future. But what does leaving the EU mean for one of Britain’s biggest obsessions?
It’s unlikely that the UK property market will see any major upheavals as Britain enters the formal start of the two years of negotiation to leave the EU. Experts have been keen to highlight that the market saw little, to no effect from the initial decision to leave following the referendum last June, and that prices have instead been rising steadily with slight blips in the capital due to stamp duty. It has even been suggested that the market may even benefit from a slowing in the economy and become more stable as a result.
If previous trends are anything to go by, numerous years of low transactions tend to be followed by years of increased activity and with a returning confidence sellers have already begun to demand higher prices. That said, although sellers may demand higher prices, the price growth of property overall will be slow. Prior to the referendum, it was highly speculated that house prices would collapse, however, such predictions have proved to be false. House prices across the UK are continuing to rise but over the medium term, the effect of property price growth is far more likely to be determined by the effect of the outcome of negotiations on the UK’s economic performance.
While price growth may remain slow for the time being, this spells good news for first time buyers in a climate where affordability worsens, especially in London. An economic slowing will mean that the chance of interest rates rising is kept minimal, thus borrowing costs remain low. Interest rates aren’t likely to rise due to the Bank of England’s reluctance to increase them even with the recent increase in inflation. This another Brexit-related move that will help to preserve affordability and indicates a low turnover market that has little upward or downward pressure on prices.
Experts are also hopeful that transactions will increase and that the Bank of England will keep interest rates low meaning it’s cheaper than ever to borrow in order to climb onto the property ladder, but there is still a large amount of economic uncertainty.
Currently, it’s hard to figure out what Brexit actually means. The likelihood is that it means a continued slowdown, or at least a very slow moving London market in terms of sales volumes. Undoubtedly, the capital will play a huge part in the trade and operations of businesses in Europe and around the world. If negotiations following Article 50 go well, this may act as a catalyst for further price growth as the economy also grows.
But what if negotiations can’t be reached? International companies who operate in London may decide to relocate which would reduce the number of residents in the capital, which would again reduce the number of transactions levels and in turn, this could lead to price decreases. For the time being, the London market remains resilient as it’s unable to be affected by any happenings thus far with such a shortage of stock weighing against an overwhelming level of demand, the problem of decreasing buyer interest from abroad is not too much of a worry.
Amid the fears of transaction levels decreasing due uncertainty surrounding the triggering of Article 50, property values in 2017 are continuing to grow and this is only set to strengthen. There is still no denying that Brexit has caused much uncertainty but the likes of stamp duty and second home tax have played significant roles in impacting the market.
Concerns surrounding Brexit are finally starting to ease which is also helping property values to continue to increase on not only an annual basis but also monthly. If you’re concerned about your ‘investment’ and find yourself wondering “how much is my is worth?”, take heart from the fact that the UK market is still one of the most impervious in the world.
If you do have qualms surrounding the worth of your house then never fear as there’s good news on the horizon regardless of Article 50. The current demand for homes and lack of supply means that any effects of uncertainties surrounding Brexit and its negotiations will be outweighed, meaning that the property market will be open for business as usual.
The residential market should welcome the triggering of Article 50 with open arms as it means the number of house sales will rise across the country due to the government finally being able to provide certainty that the plan for leaving the EU is definitely going ahead. Since the referendum and the suffering of transaction levels, it has become very much clear that the UK property market is heavily reliant on confidence so some certainty will bring stability.