What effect will Brexit have on the property market in the UK?
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On the 24th of December 2020, the EU and the UK finally agreed on a Brexit deal. Since that date, the details of the agreement were finalized and the UK officially left the European Union on January 31st, 2021. Over the last few years, experts have speculated about how the event may impact the UK property market. In this article we will explore those effects, considering the current state of the UK property market, as well as the future.
How will the Brexit deal impact UK buyers?
With the Brexit deal complete, buyers are likely to have more confidence. Potential buyers were previously unsure about the impact of a ‘no-deal Brexit’, and so many people were avoiding purchasing a new home. Now that the possibility is off the table, we may see a rise in the number of UK buyers.
Regardless, Brexit may impact unemployment, which consequently affects the property market. Data from Purple CV suggests that ‘job losses in the UK could be around 140,000 for a soft Brexit and 526,000 for a hard Brexit.’
The Coronavirus pandemic has already had a huge effect on unemployment in the UK. According to BBC News, ‘The most recent unemployment rate – from October to December – was 5.1%. This is the highest figure for five years, and means that 1.74 million people were unemployed.’ When stamp duty holidays and furlough schemes come to an end, we’ll be able to get a clearer idea about how unemployment is affecting the UK housing market.
An unstable jobs market means an increase in renters, this is likely to result in less demand in the property sales market, and a growing demand for buy-to-let landlords. For property developers who are interested in the buy-to-let market, the following months could be a great time for new projects. For more info about property development opportunities, check out NFC Property Developers.
What will be the effect on house prices?
Previously, experts predicted that house prices would drop after Brexit. However, demand post-lock-down has impacted these predictions.
According to This Money, ‘the average UK house price grew by £20,000 to reach a record high of £252,000 last year – an 8.5 percent increase on pre-pandemic prices in 2019.’ As for this year, ‘The average UK property price is set to grow by 4% in 2021, an average of £10,000.’
Is now a good time to buy a property?
Now is a great time for first time buyers to purchase a property. If you’re a first time buyer you can jump on the property ladder, while experiencing slightly less competition. There’s only the advantage of exemption from stamp duty. Even if you’re not a first-time buyer, now could be a good time to trade a lower-value home for a higher-value property. If you approach this in the right way, you could save money in the process. As the next few months unfold, we’ll learn more about the effects of Brexit on the economy and the housing market.
