Experts are predicting there will be no long-term adverse effects on the UK housing market, despite the recent triggering of Article 50. Here are some of the reasons why this may hold true:
Consumer confidence in the housing market is still high
Brexit is expected to have little impact on house prices, as local pressures such as employment and expanding families will continue to buoy them up. A survey by The BSA (Building Societies Association) Property Tracker suggests that just under half of polled consumers expect house prices to increase over the course of the next year, while only one in 10 expect them to fall over the same period. The BSA said the results show that people have higher expectations for future house prices because the worst-case scenarios for the economy straight after the Brexit vote did not come to pass.
Demand for housing is still higher than supply
The fact is that not enough houses are being built to satisfy demand, so property values are likely to rise rather than decrease. However, the increase in prices will be slow due to a crawling wage growth and strict mortgage regulations. Banks also seem more hesitant to lend, which is preventing soaring prices.
According to the Royal Institute of Chartered Surveyors, the number of homes on the market is at a record low. People have basically been sitting on their hands and waiting to see how Brexit negotiations and other economic conditions affect the market.
Savills has forecast that the number of homes sold in 2018 will fall by 16 per cent compared to this year. However, that does not necessarily mean that prices will go up. Savills instead predicts that prices will remain largely flat this year, but will rise by an estimated 13 per cent up to 2021.
Brexit is not the controlling factor at the moment
One expert, Will Herman of developers West Eleven, told The Express he thought there may be some very modest increases, but the factors really controlling price rises or a slowdown in the market were more likely to be matters like the Stamp Duty Land Tax (SDLT).
Despite predictions, it is still difficult to forecast the economic health of Britain in the coming years, which can obviously have a significant impact on how buoyant the property market is likely to be. If the pound were to weaken, inflation was to surge, and interest rates were raised, there is the possibility that there would be a reduction in house-price growth.
So, the outlook is not as gloomy as many of us feared. I suspect we’ll all be watching for signs of how Brexit negotiations are really going for some time, but the housing market seems poised to weather the uncertainty for now.