With the EU referendum result the world has witnessed a massive slump in markets and stocks across the globe from the FTSE 100 to the NIKKEI 255 in Japan. What does Brexit mean for the housing market in the UK? If there is anything we have already discovered since the result, is that uncertainty definitely deters investors and businesses. Prices in the property market are based on confidence… Looking at the immediate outcomes of the referendum have we really seen much confidence in the UK market in general? Not at all.
One of the main talking points is exploring how immigration will affect the housing market. Though the population of immigrants may decline as a result of Brexit in the long term, do immigrants from the EU really constitute much of the housing market. EU immigrants make up for less than 4% of the UK population and therefore it would seem the affect it will have on the housing market would be minimal. That being said Atwell James understands not to underestimate the significance of foreign nationals and their influence over the housing market. As the saying goes, it is not quantity but quality, as 49% of the houses worth more than £1m are purchased by foreign nationals. Considering that London is largely the host to these more expensive houses, it only makes sense that immigration and the effect that Brexit has on foreign nationals can only hinder the housing market, particularly in London.
Whist looking at London, it seems almost certain that it will suffer the most under Brexit from fewer buyers. Not only will fewer people seem interested or even able to buy property in London from abroad, but also people from London look set towards leaving as a result of jobs moving abroad, which will also reduce the number of buyers. Already in the past few days there have been reports suggesting banks like JP Morgan, Morgan Stanley and HSBC are planning on moving 1,000’s of employees to Paris and to other countries in the EU.
As a result of fewer buyers, won’t that mean houses would be more affordable?
Yes, houses may become cheaper as there are fewer buyers and with the value of the pound going down, it would appear that property was only about to become cheaper. Yes, houses will be cheaper for first time buyers. Which on the face of things can only seem attractive, however having said that, would lower prices in London really matter if we face an economic crisis and significant reduce in jobs? Furthermore with prices moving like a ‘hyperactive child’ as Julia Rampen points out, it’s hard to predict how far prices will fall. A first-time buyer might think they’ve got a good deal, just to discover the property halves in value. Independent ratings agency Fitch also pointed out the prices of houses in London were going to fall drastically as a result of Brexit.
One positive we can take from this is that it makes the North a much more attractive option for people looking to buy property. Since mainly the jobs that would be lost as a result of Brexit would be in London, northern cities, simply because they are much smaller than London would not be affected as such and the housing market would be much more stable. Although, despite the madness, panic and uncertainty that clouds the housing market, at Atwell James, we can’t help but feel that London will suffer the more than most of the UK as a result, but the question that only time will give us the answer to is, how will London’s housing market hit impact the rest of us?