One of the biggest worries surrounding the Brexit decision was the impact it could have on the housing market. House-owners and potential buyers were worried that market activity could fall, and prices would become unpredictable. And since the vote, there has been a number of conflicting reports that the market is going up, down, left and right. Don’t worry. The storm has settled. Latest reports show that the market has now become stable again. How do we know? Read on for the important information.
Following Britain’s vote to leave the European Union on 23rd June, the market suffered a definite slump. It wasn’t unexpected either. The slump actually began in the lead up to the referendum. People were anticipating the decision and becoming uncertain months before. By August, the slump had been ongoing for four months.
What does this mean? Demand dropped, mortgage providers received far less enquiries, property sales slowed, and prices took a hit. House sales generally reduce in the summer months, but with the pound dropping in value and uncertainty looming, the 2016 decline was noticeably sharper.
As we move away from the vote, however, and into the negotiation phase, it’s thought the UK property market is becoming stable once again. A sentiment-based survey by the Royal Institution of Chartered Surveyors (RICS) aims to measure the change in people’s feelings towards housing and use this to predict future changes.
Their results suggest the market will pick up following what they describe as the ‘immediate reaction to the EU Referendum’. With steady price rises over the years, July saw just 5% of prices rise, according to RICS respondents. These reported price rises increased to 12% in August, which seems to suggest the market is moving back towards the norm.
“There are clear signs that the housing market is settling down after the initial surprise of the outcome to the EU referendum,” explains Simon Rubinsohn, RICS chief economist, “Buyer enquiries did dip again in August but only modestly, and more significantly, sales expectations are beginning to edge upwards once again”.
To add to this, RICS found that price expectations for the future have become more positive. The ‘three month predictions’ have been negative since April 2016 with respondents looking towards the vote in June. They have now pushed back to ‘positive territory’, however.
Similarly, sales expectations for the next year have re-entered positive territory and the rate of decline for buyer enquiries and sales instructions has slowed. RICS concede that sales are still falling in some regions, but the patterns elsewhere indicate that this should change over time.
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