House price uncertainty in post-Brexit Britain

House price uncertainty in post-Brexit Britain: The Royal Institute of Chartered Surveyors (RICS) has conducted its latest survey of house prices since the United Kingdom voted to leave the EU. The survey suggests that house prices are expected to fall across the UK in the next three months.

In June 2016, an estimated 72,000 house sales were completed. This is 13% lower than in 2015, but up on the 55,250 figure for May 2016. This highlights that – despite allegations that as Brexit was confirmed, the supply of homes on the UK market fell at its sharpest rate to date and buyer demand hit an eight-year low – the outcome of the Brexit vote has actually had little effect on confidence in the housing market.

Adrian Gill, director of Your Move and Reeds Rains, commented: “It is important to remember that the outlook is not all doom and gloom. Already lower interest rates promised by the Bank of England to stave off any slowdown are set to ease affordability and support prices. Ultimately, with interest rates set to remain lower for longer, the Bank of England reducing banks’ capital requirements and changes in Government imminent, the short-medium term outlook for the housing market could well remain positive after all.”

PricewaterhouseCoopers (PWC) predict a varied forecast for house prices in the aftermath of the Brexit vote. Analysis by the professional services group suggests we are set for a marked slowdown in house price growth, but no major crash. There is likely to be regional variation within this slowdown. Average house prices in London could be around £60,000 lower due to Brexit than they would otherwise have been by 2018. In contrast, this reduction is likely to be only around £10,000 in Scotland and just £8,000 in the north of England.

Nationwide’s House Price Index for July has concluded that house prices increased by 0.5% in July. Nationwide’s Chief Economist, Robert Gardener, commented that “determining how much of any fall-back in activity is the result of the tax changes and how much is due to the referendum will be difficult.”

*seasonally adjusted figure (note that monthly % changes are revised when seasonal adjustment factors are re-estimated)

Source: Nationwide House Price Index July 2016 http://www.nationwide-intermediary.co.uk/includes/pdf/HPI_07_16.pdf

To add further ambiguity to this already unclear picture, think tank The Resolution Foundation recently reported that major English cities are seeing one of the sharpest falls in home ownership. They concluded that this is most likely due to incomes not being able to keep pace with house prices.

In this time of grim uncertainty and house price diffidence, getting advice from an independent mortgage adviser has never been more prudent. Our in-house independent mortgage adviser, Stefan Olingschlager, can be contacted on 01273 208813 or by email: [email protected].

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