“The property market has been especially hard-hit by Brexit-led procrastination over recent years. Transaction volumes are down dramatically since the 2016 referendum, so to are property prices and the number of properties listed for sale.
While the election result and Brexit is now agreed, many of us naïvely believe, or hope, the extended period of limbo will be over. However, much like an acrimonious divorce, we’re likely to have years of negotiations over the financial settlement. We entered the EU, or EC (European Communities) as it was known, in 1973, so leaving isn’t as simple as setting a date and agreeing terms with our friends across the Irish Sea and English Channel. What is the likely impact of these continued negotiations on property as we enter the next decade?
Rental growth in London since the Brexit referendum vote has stagnated. Across the whole of the UK, excluding London, rental growth is at its lowest since February 2013 according to data from the LandBay rental index. Year-on-year rents have increased in UK ex the capital by just over 1%, some seven times that of London.
While the capital’s stagnation has masked the relatively strong growth in the rest of the UK, the impact has now rippled out. It’s unlikely to change as we enter into this period of negotiation. We are still suffering the hangover of tax changes impacting landlords as the government try to push out the ‘Mum and Dad’ buy to let landlord in favour of built for purpose rental accommodation. And with fairly little regulation in the industry, there are arguments to support this view.
London has also dragged down national average property prices and the outlook remains mixed. In the lead up to a final decision on Brexit we had an insufficient supply of property with homeowners anxiously holding on to properties. There should be somewhat of a reprieve with homeowners feeling more confident about selling into a thawed market.
While renewed confidence may provide some support to housing prices nationwide we can’t escape the charts which show that we remain in an inflated property market. Thirty years of falling interest rates and people taking out larger mortgages has led some pundits to believe we’re more likely to see continued slow growth with further declines in prime central London.
Taking into consideration the potentially acrimonious negotiations on the finer details of Brexit and affordability of housing on one hand and renewed confidence in the thawing property market on the other, my view is that we’re not going to see much more than a slight increase in prices as we enter into the 2020s.
If you plot back long enough the last couple of years will be nothing but a blip. While I believe that the long term trend in property will be growth, I don’t expect that the next decade will reflect the rapid growth of the next. Divorce of any kind will always leave an irreparable dent.”
This outlook was included with many more on Property Solvers. Have a read and let’s see how accurate they are at the end of 2020. Will it be the roaring 20s?