How will Brexit affect house prices?
How will Brexit affect house prices? Caroline Westbrook
A no-deal Brexit could impact house prices (Picture: PA)
Boris Johnson has told the country that a ‘no deal’ scenario is now looking increasingly likely after the end of transition period following the UK’s departure from the European Union. The country exited the bloc on January 31 of this year, entering a ‘transition period’ during which many EU laws have still applied – but so far the country has failed to strike a trade deal with the Union despite extensive talks. Naturally there are concerns about the impact and how life will change – and concerns have been raised over what a ‘no deal’ scenario might mean for property prices, or how they could be affected even if a deal is reached in the coming days. Will Brexit have an impact and if so how will they be affected? Will house prices drop after Brexit?
The uncertainty over Brexit took its toll on the housing market in the run-up to us leaving in January, with prices falling across London and in the south-east – and people holding off from buying or selling as a result, especially amid fears at that stage that we would leave without a deal. This changed in the wake of the Conservatives winning the election in December 2019, with a surge in buyer demand which was dubbed the ‘Boris bounce’. The market saw what was described as a ‘Boris bounce’ (Picture: Getty Images) Mortgage approvals also rose in December 2019, with reported lending at around £22.2bn, bringing the annual total for the year to £265.8bn. Top articles by Metro Drunk driver loses control at 93mph and crashes into house
Whether or not Brexit impacts house prices will remain to be seen – while little in the UK changed following the exit due to the transition period, it could be a different story if we do leave at the end of this month without a trade deal in place. Barnier: Brexit trade deal 'still possible'
What happens next will likely depend on how the future relationship between the UK and the EU pans out. If the UK fails to strike a deal with the EU by the current end date of the transition period – which is 31 December 2020 – and the transition period is not extended – then the country would leave with no deal and revert to WTO rules on trade and security.
A scenario like that could potentially impact the likes of house prices and exchange rates – although things have already been impacted by the coronavirus pandemic, which has only served to complicate matters further. Kadir Bulgurcu from estate agents Tatewood told metro.co.uk: ‘We all knew this was going to happen but what we did not anticipate was the coronavirus. ‘It is because of this and the changes made by the government we have seen property prices rise and borrowings increase especially with the new lower rates set by the Bank of England and the drop in the stamp duty making it non -existent to first time buyer for values up to £500,000 which will end on March 31 2021. ‘We are getting very close to the January 1 2021 deadline and there is still no agreement, plus were being told there is a high possibility we will leave the EU with no deal. Brexit may not necessarily have a negative impact
‘I believe a non-Brexit deal will have a higher impact on our property sector, that is unless the government is willing to extend the Stamp Duty change and continue to lower borrowing rates for the next few years which is unlikely as there is no hint of the current terms extending any further.
‘I think we can all agree there are no words that could explain the difficult year we have all had to endure. All we can do is hope for the best and nothing more.’ Meanwhile David Price of 10ACIA explained that a no-deal Brexit wouldn’t necessarily lead to the housing market being negatively impacted, even in the wake of Covid.
‘Given the enormity of such an unprecedented event Covid has presented, the price of the average house in the UK, contrary to prior popular predictions, hasn’t collapsed this year – in fact, its grown significantly – around 7%,’ he said.
‘On the other hand, Brexit has been a known quantity for some time now, and is a far more of a benign, long drawn out process, that the market had already adjusted to. ‘Financial markets are currently pricing in the Bank of England cutting interest rates below zero in the coming months to help support the economy. ‘While negative interest rates probably wouldn’t result in a fall in average mortgage repayments from their current ultra-low levels, it would ensure they didn’t rise. ‘This could help bolster any possible financial negatives of a no-deal Brexit for some households – until Australian type trade deals are put in place.’ MORE : ‘Historic m