The decision of the British electorate to leave the EU in June 2016 came as a shock to many. Political analysts had predicted a narrow victory for Vote Remain, while the dire forecasts of financial experts on the perilous path of Brexit were thought to have resonated with property owners across the UK.
Naturally, in the aftermath of the Leave vote thoughts quickly turned to those warnings of renewed recession, and the inevitable decline in property prices which were predicted to follow.
Immediately following the vote to leave projections were pessimistic. Figures from the Council of Mortgage Lenders showed that just 58,100 homeowners moved house in July, down 14% on the previous month, and 13% down on July 2015. Elsewhere, Countrywide forecasted that British house prices would decline by 1% over the course of 2017, a startling downturn compared to the 6.5% and 8.5% growth of the previous two years.
However, there was some cause for cautious optimism, with the Centre for Economics and Business Research (CEBR), observing that ‘although Brexit has certainly sent shockwaves, CEBR expects the housing market to slow down but not plummet.’
Fast-forward a month or two, and that positivity appears to have been vindicated.
The property website Rightmove.co.uk found that house prices have actually increased 0.7% month on month following the vote to leave. The housebuilding company Persimmon similarly reported rising interest from buyers since Brexit.
Confidence appears to be returning to the market far more quickly than most experts had predicted. With surveyors now predicting that house prices will rise over the next three months, while they also foresee a 3.3% year on year average increase over the next 5 years.
Managing Director of Garrington Property Finders Jonathan Hopper summed up the growing optimism, stating that the post Brexit slow down ‘is starting to look less like a blip and more like business as usual for house prices’.
So the warnings of financial armageddon in the rhetoric of the pre-Brexit debates have yet to materialise, while the aftershocks felt by the housing market in June appear to be receding as we head into Autumn. But what of the future, is the worst really behind us?
Perhaps, perhaps not. The problem posed by Brexit to the economy and the property market lies chiefly in the fact that the true political effects of the vote have yet to be realised.
As of September 2016 Britain remains a part of the EU, but is obliged by the terms of the referendum to begin to negotiate its departure shortly. The precise terms of that departure, whether Britain will or will not remain part of the single market for example, leaves the UK economy shrouded in an air of continuing uncertainty.
Opinion is divided on the effects of Britain leaving the single market, but many feel it could have serious negative economic consequences. In this scenario it is not inconceivable that the UK housing market will suffer shocks even greater than those felt in June 2016. Should Britain negotiate a deal to remain, however, then it would appear likely that the economy and the housing market may emerge from Brexit with surprisingly little long term damage.
Only time will tell, but those with a vested interest in the UK property market should certainly take heart from the short term response of the market to the vote to leave, and from the fact that those dire pre-Brexit financial forecasts have yet to materialise.