How has Brexit affected the property industry so far?
While we await the full outcome of what Brexit means to life in Great Britain, there has been an impact in a number of areas. There have been incidents which have caused people to question or re-examine society but there have been changes in the property market too.
The biggest impact that Brexit has had on the property market came before the Referendum vote itself. This is because the uncertainty of the vote and the outcome resulted in many people holding off from buying or selling. Uncertainty is one of the biggest problems for the property market and there was a notable slow-down in the UK market in the run-up to the vote.
It is virtually impossible to say how much of an impact the Referendum vote had on the market because of the introduction of the additional 3% stamp duty charge for people buying a second property in April, but uncertainty impacts on the market. There was a slowdown in the run-up to the Scottish Referendum of 2014 and the General Election of May 2015.
Uncertainty impacts on the property market
If the uncertainty surrounding Brexit concluded with the Referendum vote, the market would probably be returning to normal around now, but the uncertainty still remains. No one knows for definite when Great Britain will leave the European Union and some experts are still uncertain whether the nation will definitely leave the EU. This means that there is an air of uncertainty, and some people will be holding off from buying or selling.
However, many people are unable to hold off indefinitely, so there have been some signs of movement. There have also been other factors impacting on the property market, related to the EU Referendum, so it is easy to see why personal or business circumstances have changed regarding the property market.
Foreign investors have looked towards the UK property market
The value of the £ dipped sharply in the wake of the Brexit outcome and this meant it became more expensive for people in the UK to buy foreign currency or buy items from abroad. This immediately impacted on construction and development firms bringing in raw materials from outside of the UK. A rise in materials means a rise in the cost of property developments, which will ultimately lead to a rise in property pricing.
The impact on the currency exchange has also created a situation where some people are keener to buy property in the UK. Foreign investors are not obtaining better value for money when they buy in Great Britain, which means there has been an increase in sales of this manner. The evidence of this is still mainly anecdotal as opposed to being a genuine matter of record yet but it is believed that soon to be published figures will confirm this status.
A property index published by a specialist property market company in the United Kingdom listed the average property price at June 9th as £297,508. One month later, the value on August 10th stood at £304,116. Add in the fact that the number of mortgages provided to first-time buyers in June was higher than any month dating back to 2007 and there are some signs that the market has responded well to the post-Brexit situation.
The sense of positivity can also be found in figures provided by HMRC. Their statistics for July suggest that there were a total of 104,200 property purchases in July, which was a 0.7% rise on June figures.
It is likely to be a long time before the full impact of Brexit is revealed but currently, there is nothing to suggest that the outcome of the European Union referendum has had a negative impact on the property market.