While we are still dealing with uncertainty in the wake of the Brexit vote, by September 2016, property experts and professionals believed that the market is now showing signs of recovery. In the wake of the referendum, there was an initial dip in property prices and some experts suggested that there would be a long-term slump, perhaps lasting as much as two years. This no longer appears to be the case and while it is a slow process, there are suggestions that the UK property market is returning to pre-Brexit levels.
One issue about evaluating the UK property market with pre-Brexit levels comes with the fact that the market slowed down before the vote. Everyone was well aware of the Referendum and with no one being confident or sure of the outcome, the market slows down. 2016 represented the third year in a row that a major referendum or election impacted on the property market due to uncertainty, so there has been many hits to the market in recent times.
Another factor to consider in the property market leading to the Referendum was the change to stamp duty for investors and landlords. April 2016 saw an additional 3% stamp duty charge being placed on certain property purchases. Before this change came in, investors and landlords snapped up prices in higher volume and then when the stamp duty change occurred, demand for property and sales slumped. This was unrelated to the Referendum vote but the timing of the two events ran into each other, making it difficult to ascertain what effect occurred because of what issue.
It is only now in October of 2016 that the UK appears to be moving forward with Brexit. Further political unrest and upheaval delayed any changes and it seems as though Prime Minister May has committed to starting the Brexit process before March of 2017.
With details relating to how Brexit will occur remaining scarce, there is still uncertainty in the market, and this is clearly going to impact on people’s actions in the property market. Buying or selling property is likely to be the biggest decision a person will make in their life, and uncertainty regarding the economic future of the country is going to be a big factor in how people think about the market.
Until more details about Brexit comes to the fore, there will still be people unwilling to make a move in the UK property market.
The first real impact of Brexit came with the £ slumping in value, impacting on many people in the UK. There was also an impact on developers, who overnight found the price they were paying for raw materials had risen if they were importing goods into the country. This had a double-negative impact on the economy but there was one group that benefitted from the slumping UK currency.
Foreign investors suddenly found that their money could go a lot further, making it cheaper for them to buy property in the UK. This increase in property investment helped to offset any fall in UK property investment from local residents or buyers.
Figures released by the Bank of England stated that the number of mortgage approvals in August fell to less than 60,000. This was down from the 61,000 approvals in July and it is believed that these figures were the lowest in around two years.
This is interesting but it doesn’t tell the full story. Does this indicate that the lenders are tightening up their criteria again or does it perhaps suggest that fewer people have applied for a mortgage? Of course, it could also be a combination of these things, or it could be unrelated to these issues!
This is one of the issues of the property market. While it is possible to speculate on the outcomes, without a full range of figures and statistics, it is difficult to say for definite why a certain outcome has occurred.
There is no doubt that the UK property market has taken a slight dip in the wake of Brexit, and there are concerns in some quarters about confidence in the market. However, there is no getting away from the fact that the UK property market remains robust and while Brexit has negatively impacted on some people’s ability to invest in the market, it will have improved other peoples.