House price growth and value following the EU referendum
By Nadine Miles
There has been much argumentation within the media surrounding the outcome of the effects of Brexit to the point where it has become difficult to separate fact from fiction. Economists and politicians have made many suggestions during the build-up to the EU referendum which suggest that, should Britain vote to leave the EU, house prices will fall dramatically. The purpose of this blog is to challenge these assumptions using current studies which provide an in-depth analysis to determine the projected short term and long term effects of Brexit specifically within the property market.
It was predicted by the media prior to the onset of the Brexit vote that house prices could fall by as much as 18% by 2018 in the event that British people vote to leave the EU. In support of this, ratings agency Fitch also suggested that house prices could crash by 25% in the event of Brexit. Critically, however, this was argued by the treasury who recognised that the calculations used to determine the rate of decline was based upon today’s house prices, rather than prices in two years’ time, which are forecast to be 10% higher than they are today.
So what is actually happening within the property market?
Research conducted by Rightmove investigates the possible causes for the slower property growth and have reflected these critical points:
- Price property coming to the market falls 0.9% (-£2, 647) this month, within usual It is usual expectations for the run-up to the summer holiday season.
- Comparing house prices for this period to last year is not a good basis for comparison as figures were distorted due to the post-election boost to house prices.
- If we compare house prices from this period to the same period in 2014 it becomes apparent that buyer enquiries are at the same level.
Further research conducted by PwC (Pricewaterhouse Coopers) analysed data from the ONS (Office for National Statistics) to examine the short term and long term impact of Brexit. Key findings indicate that the decision by the UK public to leave the EU has impacted on the growth of the property market. However, following an initial dip in the UK house price growth, a gradual recovery will occur with price growth picking up again to around 4% in 2018 and 6% in 2019. The graph below shows how the house prices and value are projected to rise and fall from 2016 – 2020 within the West Midlands.
In light of current research it would appear that the UK’s decision to leave the EU has impacted on the property market but not to the extent that was originally forecasted by the media. As current research has raised our awareness of other key points which have contributed towards the current market slowdown in house price growth. And provided the general population with some projected statistics that accurately reflect the current house price growth and value within the property market.