You are thinking about buying a new house? You know, where you live can have a huge impact on your happiness and if your current city doesn’t feet all your needs, then just leave! It is a lot better to make that kind of decision while you are young. But, of course, you can’t buy a house if prices keep going up nor sell your house if the prices keep going down. And this is where the problem lies.
According to the newest research, the average house price across the UK rose by 1.4% between the last and this year. It went from £223,612 to £226,798. However, the situation is not the same across the entire country. The research found that the north of the UK, which has always been less dependent on foreign investments than the south-east, has been less affected by the “crisis”.
And as far as London is considered, the average price fell 1.9% over the past year. It went from £472,357 last year to £463,283 in March 2019. But again, not all parts of London are equally affected.
In Kensington and Chelsea, the prime housing market in London’s central zones, prices bombed by 16.4%, while prices in Westminster fell by 14%. We asked around to check those claims and according to a leading removal company in Chelsea, many companies from this area are selling their properties and moving their assets to EU countries.
Houses in the City of London borough went up by 16.2%. And in the outer areas of London prices fell. In Barnet, prices fell by 4.1% and in Harrow by 2.9%. On the other hand, Merton and Newham saw house prices rise by 4% and 5% respectively.
And, if we look back?
Well, the rate of house price growth went up in the year after the referendum. To be more precise, prices went up everywhere in the UK except Scotland.
In 2018, two years into the uncertainty, year-on-year price growth had improved in every single UK nation except England.
And by the middle of this year (2019) as the date for Brexit is (allegedly) approaching the rate of growth slowed down to a UK average of 1.01%.
This shows how difficult it is to estimate the course of future events when it comes to Brexit.
We don’t know how to act during this process because this is the first time a country wants to get out of the European Union. After all the delays, we are not sure if the Brexit will take place at all and we certainly don’t know the terms under which the Brexit will take place and the repercussions of it after it happens.
Is there a reason to be afraid?
Britain voted to leave the E.U. in June 2016. The majority of people who voted for the Brexit said that they had been protesting against the surge in immigration.
And whether you are the one who believes that staying in the EU is the right thing to do, or you are avid Brexiter, no one can deny that the uncertainty around when the UK will leave the EU, and the terms under that “little” decision, are causing property market jitters. This is a fact.
These elections are doing nothing to calm us down. The elections will shape how, or whether, the UK will finally exit the EU after months of parliamentary deadlock. Johnson wants to action a swift exit from the EU and Corbyn thinks a second referendum is a better idea. The first option is the thing many foreign (and domestic) companies are afraid of.
An accountancy firm KPMG has predicted that house prices would fall around 6% if Brexit ends without a deal. The worst-case scenario would be a price drop of over 20%. And in July this year, the Office for Budget Responsibility said that a no-deal Brexit could cause house prices to drop by almost 10% by mid-2021.
This is why the labor market has also gone down recently. The pay growth is slowing down and employment is falling by 58,000 in the three months to September 2019. This is the biggest employment drop in four years.
So yeah, Britain will not explode whatever happens with Brexit, but there will be some repercussions.
What do the experts think?
Well, the consensus is that buyers and homeowners should not panic or make any irresponsible decisions. Those price drops, we have witnessed in some regions, don’t mean that situations won’t stabilize in the future. It will… Well, eventually they will.
In the meantime, you should talk with a professional mortgage adviser. The future of Brexit is still unknown, and whatever the outcome of this Election Day, your Mortgage advisors may not have all the answers. However, they will be able to explain your mortgage options to help you navigate this strange period.