Brexit won’t stall market – house prices to climb again
Brexit vote has not just made the UK quit the European Union (EU) but it has also created economic uncertainty in the country. The real estate sector has been sternly affected but the data shows some other picture – the house prices in the UK rose to a whole new level in July. The latest statistics obtained from Nationwide Building Society suggest that the house price rose to a record high value of £205,715 on average, compared to 2015 values – up by £10,094 just in one year. Seeing the record high prices, the experts opine that the growing demand would be cooled off in the coming months due to financial ambiguity.
Following the EU referendum, the housing market in the UK is left in an uncertain condition and it may take a few months to clearly understand the underlying market trends. There is another bunch of real estate experts who claim that the UK’s decision to quit the European Union will not badly affect the country’s housing market. House prices will rise again, after showing a temporary dip in the London real estate market. In the coming three to four years, there will be a slight dip in the house prices but after that, the average UK property will be around £40,000 more expensive, as per the Centre for Economics and Business Research.
Despite moderating growth in house prices over the coming years, the average home price will hit the £234,000 tag after 2020 – with an annual 3.9 percent increase on yearly basis. As per the data fetched from Nationwide Building Society, the experts state that it is difficult to assess the true impact of Brexit on the UK real estate sector because the stamp duty was increased in April for second homes, which further complexes the situation and makes it difficult for experts to accurately predict the market. While in the coming few months, experts will be in a better position to forecast the market.
It is also learned that even before Brexit, the housing market transactions were likely to slow down due to stamp duty imposed on second homes. Currently, it is difficult to determine that how much fall-back in the real estate activity is due to tax changes and how much is due to the referendum. And July’s price data cannot illustrate the complete effect of the Brexit vote as there is a short lag between a buyer’s decision to purchase a property and applying for a mortgage.
The Royal Institute of Chartered Surveyors reported a decline in numbers of new buyers’ inquiries due to the expectation that prices will drop down – these trends have been impacted by both the change in tax amount and referendum. Brexit has certainly created uncertainty in the market, which will slow down the activity but the market would not stall. Prices are set to pick up again from 2018-19 onward. However, in the long run, the activity in the housing market will depend on both the economic conditions of the country and immigration policies for the rest of the world.
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