UK Property after Brexit

Property Prices After Brexit – The Complete Guide

Will House Prices Drop After Brexit in the UK?

The issue of house prices after Brexit is one that’s been dominating both property news and the UK press for many years now. Ever since the Brexit vote in June 2016, many UK residents and overseas investors have been left wondering – will property prices drop after Brexit? This state of mind remained for many years following the vote, provoking a lot of uncertainty. In 2019, the UK was set to leave the EU in March, and then again in October. Now into 2020 and following years of uncertainty leading many to question ‘will house prices drop after Brexit in 2019?’, the country is now within the transition period following the UK’s formal leave from the EU on 31st January.

According to Boris Johnson, the transition period following our exit from the EU will last up until the end of 2020, while negotiations are planned for the upcoming months to try and reach a trade deal with the European Union. For those eager to find out whether the final outcome will affect their finances and investments, we’ve compiled this in-depth Brexit investment guide with expert advice on everything you need to know about property prices after Brexit. This includes whether or not there will be a drop in the average house price after a no deal Brexit, a recap of the key Brexit news from the past five years, and all the top predictions for the property market after Brexit.

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The Brexit Timeline – What’s Happened So Far?

There’s no denying that Brexit, and the negotiations involved, have been a long and tiresome process. Before thinking about what will happen to property prices after Brexit, you might want to refresh your memory on the key Brexit events that have happened over the last five years. Here’s a Brexit timeline to remind you of what’s happened so far.

 

 

Brexit Timeline

22nd February 2016

The Date for The EU Referendum Vote Announced

In February 2016, David Cameron announced that the UK would vote in an EU Referendum on 23rd June, officially launching the Brexit campaign.

Brexit Timeline

23 June 2016

UK votes to leave the EU

In June 2016, the UK voted to leave the EU, with the leave campaign having won by 51.9% to 48.1%. David Cameron announced his resignation as prime minister the following day. In the month following the vote for Brexit, property prices in the UK fell by 1%, which was a bad sign for the Brexit effect on house prices, but a much less drastic drop than first expected.

Brexit Timeline

13 July 2016

Theresa May Announced as Prime Minister

Less than a month after the Brexit vote, Theresa May was appointed as the new Prime Minister, having won the Conservative Party leadership contest by default.

Brexit Timeline

29 March 2017

May Triggered Article 50 of the Lisbon Treaty

On 29th March 2017, Theresa May triggered article 50 of the Lisbon Treaty, prompting Brexit with a notice period of two years.

Brexit Timeline

18 April 2017

Theresa May Announced Plans to Hold a Snap General Election

Theresa May called a snap general election in a bid to increase her authority in both the House of Commons and the public eye. This launched an electoral campaign between Conservative, Labour, SNP, Lib Dems, DUP and Sinn Féin.

Brexit Timeline

8 June 2017

General Election Saw May Lose Majority and Make a Deal With the DUP

The final result of the 2017 general election saw no seats win a majority, with the conservatives losing seats to Labour and the Lib Dems in England and Wales. As a result, Theresa May was forced to make a deal with the DUP in order to stay in power.

Brexit Timeline

15th January 2019

May’s Withdrawal Deal Draft Rejected

In January 2019, the UK Parliament held a vote to decide whether or not they accepted the Withdrawal Deal offered by Theresa May. This deal was rejected with just 202 votes for and 432 votes against.

Brexit Timeline

13th March 2019

MPs say No to a No-Deal Brexit

Parliament voted in favour of a motion which aimed to rule out the UK leaving the EU without a deal, although the result of this vote was not legally binding.

Brexit Timeline

10th April 2019

Deadline Pushed Back to 31st October

Despite the aim to leave the EU on 29 March this year, a new Brexit deadline of 31st October was announced due to the fact that Theresa May’s withdrawal agreement was rejected three times in total.

Brexit Timeline

24 May 2019

Theresa May Resigns as PM

On the 24th May 2019, Theresa May announced that she was standing down as Prime Minister. On 24th July, May headed to Buckingham Palace to tender her resignation to the Queen.

Brexit Timeline

24th July 2019

Boris Johnson New PM

Boris Johnson is appointed as the new leader of the conservative party, now heading up the Brexit campaign.

Brexit Timeline

29th October 2019

UK Parliament Approve General Election

In a similar turn of events to the 2017 election, Boris Johnson calls for another snap general election. Parliament approves this and a new election campaign is launched ahead of the December election.

Brexit Timeline

12 December 2019

Boris Wins Majority

Boris Johnson won the 2019 general election with a comfortable majority of 365 seats. This reignited the nation’s confidence in both the UK government and Brexit as a whole, causing experts to predict that after Brexit, property prices would remain stable.

Brexit Timeline

9 January 2020 

MPs back Withdrawal Agreement Bill

The Commons voted 330 to 231 in favour of Boris Johnson’s Withdrawal Agreement Bill – the bill that will implement the UK’s Brexit deal.

Brexit Timeline

31 January 2020

Departure Day

The UK departed from the EU at 11 pm on 31st January 2020. The country has now reached the Brexit transition period before all agreements between the EU and the UK are made by the end of the year.

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Property Prices After the Brexit Vote in 2016

One way that we can try and find out about the overall Brexit effect on house prices in the UK is to look at past property price changes. In the months leading up the Brexit vote in June 2016, there was a lot of uncertainty in the press. Many remainers were fearful of an outcome in which the UK voted to leave the EU, resulting in articles asking ‘will house prices drop after Brexit?’ and ‘should I buy a house before or after Brexit?’

So what actually happened in the months following the Brexit vote? While the UK economy did slow down throughout the second half of 2016, the country’s property market didn’t immediately suffer from the so-called ‘Brexit Armageddon’ that was initially feared. The GBP had one of the biggest drops that the UK economy has experienced after the Brexit vote, with the pound sinking to a 31-year low against the dollar on Wednesday 6th July 2016. By 24th August, however, the pound rose to £1.32 against the US dollar – the highest rate it had been at in three weeks.

 

What is the Effect of Brexit Vote on Real Estate Prices in the UK?

After months of ‘will houses be cheaper after Brexit?’ and ‘how will the Brexit vote affect my investment?’, it became evident that fears of a declining housing market after Brexit’s vote were not living up to expectations. Findings from a Bank of England regional agents survey revealed that while there was a dip in UK property market activity following 23rd June, the market had proved to be far more resilient than first expected.

Brexit Timeline

By October 2016, house prices had risen by £2,623 in just one month, boosting the average UK house price to £309,122. In the year from October 2016 to October 2017, property prices in the UK as a whole grew by 4.5%, revealing an optimistic outlook for the UK’s housing market. So, just how drastically have property prices after Brexit’s vote grown from 2016 to 2019?

According to data from the Land Registry House Price Index, UK house prices increased by 11% in the 40 months following the European Union Referendum. The highest level of growth was seen in England, followed by Wales, Scotland, and Northern Ireland. Specific regions in the UK also saw higher growth in house prices after the Brexit vote in 2016, with the highest rises coming from the West Midlands, East Midlands, and the North West.

These promising house price statistics were definitely good news to those investing in UK property, but there was also the question of rental prices, and how fluctuations in the rental market could impact buy to let investments. With buy to let, rental yields are one of the key factors that investors look for in their property ventures, and many were left wondering whether their rental income would be affected by the 2016 Brexit vote. Thankfully, this wasn’t the case, with average rental yields in Northern UK areas having increased by up to 4.3% by the end of 2016.

While these statistics by no means provide a solid answer to the question on so many people’s lips – ‘will the housing market crash after Brexit?’, they do suggest that the uncertainty brought on by Brexit may not damage the property market as much as many predicted. Judging by how well the UK property market held up following the EU Referendum vote, it’s hopeful that our final exit from the EU will bring similar levels of certainty to the market.

Boris Johnson Brexit Timeline

The Boris Bounce of 2019/20

The lead up to the 2019 referendum was a tense time for the UK government, with many fearful of Boris Johnson’s intentions for Brexit. One of the biggest concerns was that with Johnson leading the country, we would end up with a no-deal Brexit – prompting many to question whether the average house price after a no deal Brexit would suffer. While we’re still unsure of the latter, it’s evident that Boris Johnson’s election has, in fact, strengthened confidence in both Brexit, the UK economy, and the UK property market. It is for this reason that Boris Johnson’s election victory in 2019 has led to what’s now being referred to as the ‘Boris Bounce’. Ever since Boris Johnson won the 2019 general election with a large Tory majority, a number of improvements have been noted.

As soon as the result of the General Election was announced in December 2019, the GBP reached a rate of 1.35 USD – the highest level it’s been at since May 2018. This massively increased confidence in the UK economy, especially since the GBP reached lows of 1.22 USD after Boris Johnson first became Prime Minister back in July 2019.

At the same time following the 2019 general election, investment sectors witnessed significant growth in share prices. The share prices of FTSE 100 and FTSE 250 companies grew by 1.1% and 3.4%, while Barclays, RBS and Lloyds all saw share prices increase by 6%, 8% and 5%. Property developers and contractors in the UK also saw their share prices grow, such as Barrett and Permisson who reported increases of 14% and 12%. The International Monetary Fund, an international financial organisation, has even predicted that thanks to the ‘Boris bounce’, the UK will see stronger growth than Germany, Japan, and France in 2020/21. So what do the house price growth figures say?

According to Halifax data, December house prices reportedly leapt by 1.8% compared to the previous month, boosting the annual increase to 4%. Additional research also shows that as of January 2020, average asking prices for properties in the UK had risen by 2.3% since 12th December. According to Rightmove, this increase has added around £6,785 to the value of the average UK property, boosting the average property price to £306,810. Interestingly, this increase is the largest monthly rise for this time of year recorded by Rightmove since 2002.

If you’re an investor that’s wondering ‘how will property prices be affected by Brexit?’, figures like these, paired with the overall evidence of stability in the UK economy, should be enough to put your worries at ease. While we still don’t know what will happen to property prices post Brexit’s transition period, particularly whether or not we can expect a drop in the average house price after a no deal Brexit, recent patterns following major Brexit-related events have revived property market confidence as a whole.

Property Market After Brexit

What Do the Experts Predict For the Housing Market After Brexit?

If you’re still unsure about the possible outlook for the housing market post-Brexit, we’ve compiled a selection of thoughts and predictions from some of the top industry experts.

What will Brexit do to the property market if there is no Brexit deal? 

A question on many people’s lips is ‘Will house prices crash after Brexit without a deal?’. In July 2019, The Office for Budget Responsibility predicted that a no-deal Brexit could cause property prices in the UK to drop by almost 10% by mid-2021. While we can’t completely ignore the possibility of drops in house prices after a no deal Brexit, investors shouldn’t be immediately put off by these predictions. We’re now within a transition period of twelve months, which is plenty of time for a deal to be agreed. These predictions of a 10% drop in house prices also fail to specify the exact locations which will be impacted. The North West region, for instance, has remained strong over recent years in the face of stagnant or declining property markets in other UK areas.

Boris Johnson Brexit

What will happen to property prices in London if the Brexit deal doesn’t pass?

Despite not knowing whether or not we will leave the EU with a deal, property experts JLL predict that the London housing market after Brexit is set to see some progress over the coming years. In a recent study, JLL have predicted house price growth of 1% across Greater London in 2020, followed by 2.5% growth in 2021 and 4.5% growth by 2022. While London is still considered less of an attractive investment when compared to opportunities in the North, these predictions suggest a positive future for the capital.

What will happen to property prices after Brexit?

Property experts Rightmove have predicted that house prices in the UK will grow by 2% on average in 2020 due to an increase in market and consumer confidence. Much like in previous years, the North West region is expected to dominate the housing market post Brexit, while the South is likely to see less growth.

How will Brexit affect property investment?

Predictions from the Royal Institution of Chartered Surveyors suggest that rents in the UK will increase by 2.5% due to an ongoing gap between supply and demand in the UK property market, paired with average house price growth of around 2%. If true, this suggests that 2020 is a great year to go ahead with your buy to let investment, allowing you to purchase your investment property before it rises in value while also benefiting from attractive returns.

Should I Invest in UK Property? The Key Points On Brexit and House Prices

There’s definitely a lot to think about when it comes to the issue of property prices after Brexit, and whether or not we can expect a strong housing market post Brexit’s finalisation. If you’re considering investing in property, here are some points to take away:

 

  • Following a slightly rocky period after the initial EU Referendum vote in 2016, the UK economy and property market is now in a much more stable state after the 2019 general election. If the UK and EU can agree on a Brexit deal prior to the end of 2020, new rules on trade, travel and business will take effect on 1st January and confidence in the housing market will surely continue for many years to come.

 

  • Ultimately, the question of ‘Will house prices go down after Brexit?’ is dependent on factors such as the Brexit deal, and the UK area you’re looking to buy property in. The majority of experts, however, have confidence in the market moving forward. Recent house price predictions post Brexit have revealed an increase in property sale prices in December 2019 compared to the previous month, and experts have predicted that property prices will continue to rise throughout the coming years.

 

  • According to past property market patterns and expert predictions, cities in the North West region are expected to have the strongest housing market after Brexit. According to property market analysts, cities where wages are increasing in line with house prices will perform at the highest rate in the coming years. In a recent report by Hometrack, Liverpool is revealed to have rapidly growing house prices. Despite this, however, the city is also hailed as the second most affordable city in the UK, which can only mean that wages are increasing. Both before and after Brexit, property prices in Liverpool present Liverpool property investment as the most attractive UK investment opportunity.

 

  • Not only are house prices set to see an increase, but predictions on the housing market after Brexit also reveal rental price growth. This is a great sign for UK buy to let investors, boosting rental yields and capital growth potential. Research by JLL suggests that along with a rise in the average homes value, rental costs in Liverpool and Manchester are expected to grow by 3%.

If you still have some questions on Brexit and the UK property market in the UK or are wondering ‘will house prices drop after Brexit in the UK?’ feel free to contact our team at RWinvest. We have experience and expertise in all things property investment and are able to talk you through our most promising investment options for 2020 and beyond.

DISCLAIMER

This literature should be treated as general guidance and not construed as investment advice. Prospective purchasers must rely on their own due diligence. All information and details are given in good faith and are believed to be correct but any intending purchasers or lessees should not rely on them as statements or representations of fact but must satisfy themselves by inspection of the correctness.