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Has Brexit Damaged the Housing Market?

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As Britain goes to the polls, many estate agents and mortgage lenders have claimed that the long and winding road to Brexit has damaged the property market.

But like so many things said both before, during and after the Brexit vote in 2016, this claim is only partly true. The real picture is less clear cut.

We look at how Brexit has played out across the UK property market so far, who the winners and losers have been, and what might happen when the UK does finally exit the EU.

Has Brexit slowed the housing market down?

The Rightmove, Halifax and Nationwide house price indices all point to a softening property market as Brexit applies the brakes to the market.

Slowing rises

The most recent index from the Nationwide is typical; house prices are growing by just 0.4% at the moment which means on average each home in the UK has increased in value by £800 year-on-year.

By comparison, during 2016 homes increased in value by £9,100 on average.

But these figures mask very different conditions around the nation.

Geographical differences

So, how does Brexit and house prices differ across the country?

While London house prices are only rising weakly by 0.5%, further north it’s a much rosier picture. Prices in Leicester are rising by 4.5%, in Manchester by 4.4% and in Liverpool by 4.3%. In a nutshell, the further south you go, the weaker the price rises are.

Buyers in the south are keen not to over-pay for properties and are haggling sellers down, which is subduing price rises.

But the number of homes being sold, a key measure of the market’s pulse, is holding fast. The number of homes sold each year across England has stayed constant over the past five years at approximately 1.2 million homes a year.

Is the time right for first time buyers?

The most active people within the property market in recent years have been first time buyers who, despite Brexit, have taken the view that they just need to ‘get on with it’ and step on to the property ladder. They currently make up over half of all buyers, the highest proportion since 1995.

Their confidence has been boosted by the hugely popular Help to Buy scheme, and rock-bottom mortgage interest rates.

Whilst the Help to Buy ISA scheme ended on 30 November 2019, the Help to Buy shared equity scheme is due to carry on until 2023. So, there is plenty of time to get ready to apply for a Help to Buy mortgage. Government help to buy a home continues to get others on the property ladder. 

It is also the ideal moment to bag a bargain if you’re buying without government help and are looking to live in outer London or its outlying commuter towns and cities such as Cambridge, Crawley, Elmbridge, Harrow and Milton Keynes.

Many of these, Land Registry figures show, have witnessed reducing house prices this year. This means it’s a buyers’ market that makes it easier to negotiate a house price.

Will there be a ‘Brexit bounce’?

Confidence is the glue that sticks the housing market together because people will only commit to larger mortgages and bigger homes if they feel confident about their financial future.

And there have been predictions by experts that, once confidence returns to the economy, there will be a surge in people moving up the property chain.

This view relies on the assumption that the UK will see a business boom after Brexit which, of course, is up for debate, particularly if we leave without a deal.

Nevertheless, Phil Spencer points out that: “Some parts of the UK property market, particularly in London and the South of England have been held in check for so long that there must, surely, be a strong possibility of a surge in buyers and sellers returning to the market once Brexit happens for real.

“But we will need a deal that finally ends the economic uncertainty and restores confidence in borrowing money for that to happen.”

Are you about to go house hunting in the current political climate? Find all our buying a house advice here in one place.

Last Updated: January 3rd, 2024