There is no doubt that Brexit has lowered confidence in the market and created uncertainty within not just property, but the economy in general. However, it is important to understand the differing extent of this effect across the UK market.
In the year up to November 2018 Property prices in the UK increased by 2.8%. A regional breakdown of this figure from the Land Registry shows that this growth is not consistent across the whole country. The West Midlands recorded the greatest annual price increase, up by 4.6%, closely follow by the North West region. On the either side of the spectrum, London had the greatest annual price fall, down by 0.7%, and month on month they were down by 1.2% to £472,901.
From the figures above, it is clear that Brexit (and other legislative changes such as stamp duty) has had a much more significant impact on the London housing market. Richard Snook, senior economist at PwC also comments that:
‘The price decline in London continues unabated and shows signs of accelerating. Prices dropped by over £5,000 between October and November. The London market has now given up all gains since December 2016 when prices were £472,400’
‘London is one of the most internationally dependent parts of the UK, due to economic integration with Europe and the high share of foreign citizens in the labour market, therefore we predicted in our July 2018 market projections that London house prices would underperform any other region,’ he added.
‘It appears clear that Brexit related uncertainty is weighing on the market. In all other regions of the UK, house price inflation remains in positive territory,’ he concluded.
With the recent rejection of Theresa May’s withdrawal plans, the prospect of a no-deal is growing more and more possible. The official deadline for Brexit is approximately 10 weeks away and if MP’s were unable to agree on a withdrawal plan, this may have a huge effect on the UK economy.
It is important to note however, that property investment is considered a stable, long term investment and usually performs as the strongest asset class even through economic turmoil or financial crashes. Savills predicts house prices in Britain to rise by nearly 15% from 2019-2023, with the highest increases expected in the Midlands and the North West.
The reason why these areas are still predicted to perform strongly is majorly because demand is simply outpacing supply and as a simple economic rule, this leads to increasing prices. This has led to construction of new-build properties rapidly rising in city centers. Off-plan investment options has also risen with more new developments emerging and investors wanting to pick out the best stock as soon as possible.