Few days ago, UK Prime Minister, Theresa May gave a speech following the final move of Brexit and UK’s relationship with the EU going forward. In her speech, she announced that UK would leave the single market.
Nonetheless, it would still be deeply involved in business with The Union. The PM also urged member countries not to ‘punish’ the UK for its decision as it would reflect poorly on their values as a respectable organisation. She declared the UK open for business and invited investors to start trading.
How does the final stance on Brexit impact the current UK housing market?
In the same way it happened in June last year, when the vote was fresh in people’s minds, the markets will once again be thrown into uncertainty as people’s doubts are renewed.
Before the results of the referendum, there were predictions of doom and gloom about the property market. One Treasury report posited a worst-case scenario of 18% plunge in price of housing. Although the property market experienced initial turbulence, there was no real apocalypse. Perhaps that was because nothing had specifically changed.
Brexit and the future of the property market
In the coming months, the UK government will trigger Article 50, and the complexity of the negotiations will definitely affect the overall UK economy. At the risk of sounding like the ‘doomsday’ experts back in June 2016, here are some things to expect:
As investors pause to see what direction the markets take, many investment deals will be put on hold. It is therefore expected to weaken the economy for the period. This will, no doubt, have negative consequences on the residential property market.
The idea of weaker economic growth and increased pressure on household income will slacken any upward growth on the price of housing from 2017 to 2018. During this time, delicate consumer sentiments will almost nullify any boosts from the low interest rates. It is believed that by 2019, when all the dust is settled and the market landscape is clear, the UK property market will pick up growth.
House prices will rise at a slow pace
According to the mortgage lender Nationwide, the price of housing in the UK will rise in spite of Brexit, but at a slow pace. Robert Gardner, Nationwide’s chief economist, explains that the property market is generally dependent the greater economy, which is uncertain at the moment. It will therefore, experience a trickle-down effect.
Impact of foreign affairs
The US elections has also had its fair share of influence on the UK economy, with investors concerned about Trump’s remarks on free trade. The 45th American President who will be inaugurated on 20th January, has said that America’s stance on trade should be tougher. This has forced some potential investors from the US to halt their investments in the UK and worldwide for the time being.
Eric at Richmond Condos believes the world is changing significantly. “The past year has shown that what people believe to ‘business as usual’ can take a sudden U-turn anytime. From Brexit, to Donald Trump winning the US election. Nevertheless, the housing market will continue to remain a strong backbone for the US and UK economies,” Eric concludes.
We can only wait and see how the year turns out for the market. The UK property market has always been known to bounce back in spite of hard hits. Perhaps, 2017 will be no different.