Buyers jumping back into UK housing market after Brexit

Some people who deferred buying a home after the Brexit vote on 23 June 2016 are jumping back into the UK property market, media reports said...

The impact of the Brexit has been less severe than anticipated, say experts.

Some people who deferred buying a home after the Brexit vote on 23 June 2016 are jumping back into the UK property market, reported Bloomberg.

Steve Victor, for instance, didn’t proceed to buy his first house the day after most of the country’s citizens voted to leave the European Union (EU). But a month later, he spent £730,000 (S$1.27 million) to purchase a new three-bedroom penthouse in London’s Surrey Quays, near the Canary Wharf financial district.

“I bailed on the initial shock, but after it sank in I came to the conclusion I had to take the plunge at some point,” said the 34-year-old IT contractor. “Despite my fears, prices have already risen where I bought.”

While residential prices in London declined after the vote, it rose nationwide, albeit at a slightly slower pace than before. Based on official statistics, home prices across the UK increased 6.2 percent in the year to January 2017, buoyed by record-low mortgage rates. However, it is marginally lower than the 7.8 percent growth during the previous year.

Property consultancy Knight Frank revealed that London was more impacted by the Brexit vote, with prices in its top districts falling 6.6 percent in the year through February.

This contrasts with a drop of 10 percent to 18 percent forecasted by Chancellor of the Exchequer, George Osborne, if the UK were to secede from the EU.

Moreover, home sales held firm at around 97,000 units per month between July and November 2016. While this is lower by about 10,000 a month compared to the corresponding period in 2015, the figure rose to 104,000 in February 2017.

Capital Economics, which originally slashed its home sales prediction by 10 percent after the Brexit vote, now believes that sales volume would rise “gently” over the rest of the year.

“The impact has been much more muted in the mainstream market than we anticipated,” noted Lucian Cook, Research Director at Savills Plc.

“The triggering of Article 50 itself has been factored in by buyers and the housing market has stood up because there’s been no discernible impact on the economy,” he noted.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg