How will Brexit affect the housing market?
Back in March, house prices jumped fuelled by a surge in buy-to-let, which was largely due to the rush to beat the stamp duty increase. According to the Office for National Statistics, the UK’s ...
Back in March, house prices jumped fuelled by a surge in buy-to-let, which was largely due to the rush to beat the stamp duty increase. According to the Office for National Statistics, the UK’s average house price grew by 9%, while the Council for Mortgage Lenders revealed that house purchase lending was up 60% compared to the March 2014.
However, the property market boom could soon be ancient history. On 23 June 2016, the UK will go to the polls and vote to determine its future with the European Union (EU). While this has potential implications for all areas of our lives, one area that will be hit hardest is the housing market.
According to the Chancellor, George Osbourne, a vote to leave the EU (known as Brexit) would cause an “immediate economic shock", and that by 2018, our homes could be worth 18% less. However, former Business Secretary, Sir Vince Cable, believes that a fall in house prices is a good thing to increase affordability and restore economic balance.
New research commissioned by Yorkshire Building Society, has found that 31% of non-home owners aged 35 to 40 have given up, saying that they don’t think they will ever be able to afford to buy a property. That’s half a million people across the UK expecting never to be able to afford to own their own home, unless there is a dramatic downward shift in house prices.
So how could Brexit affect the property market
Interest rates would increase
Many economists predict that a vote for Brexit will lead to the pound Sterling falling in value. This makes imports more expensive, which puts pressure on the Bank of England to increase interest rates. This means the cost of a mortgage will rise faster.
House prices decrease
A vote for Brexit will reduce immigration in the UK. With less people to house, it reduces demand and there will be more properties available to the market. This means house prices will fall, enabling many first time buyers to purchase a home they once thought was impossible.
More new homes
Under current EU regulations, there are restrictions on where we can build new properties. A vote for Brexit would reduce these constraints on planning and house building, again, making more affordable homes available to first-time buyers.
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