23 Jun How Will the EU Referendum Affect the Property Market?
Today is a really significant date in Britain’s history, and the outcome of the EU referendum is something that could have a huge influence on the way people live their lives over the next few decades. The conversations surrounding the referendum covers all kinds of topics, but one of the most discussed is the property market. How will homeowners and first-time buyers be affected by the vote? Nobody knows for sure, but we have rounded up a summary of some of the possible changes to the property market which might begin to take shape after todays vote.
No one can be sure about what would happen if the people of Britain decided on a Brexit, but most property experts agree that it would at least cause property prices to fall in the short to medium term. Even a trivial change in house prices would be a significant shift from the norm, considering the value of properties have risen over recent years, but the size of the dip will largely depend on confidence in the market. If there is a lack of investment and lack of sales/purchases in the UK property market, then we could see prices languish for the next few years.
A Collapse in Demand for the High-End of the Market
If Britain were to leave the EU, there is a high chance that a high number of major international businesses would relocate their headquarters elsewhere. If this were to happen, their well-paid executives will also leave, meaning it is likely that the demand for high-end property will crash. This would likely result in a problem for London and surrounding areas, with a number of high value properties and nobody to inhabit them.
Changes to Mortgage Repayments
In recent years, homeowners in Britain have become used to low interest rates on their mortgage repayments, with record low interest rates of 0.5% for 86 consecutive months. However, with Brexit comes a chance of a rise in interest rates, which in turn will make monthly repayments harder to keep on top of for some. However, those arguing for Britain to leave the EU claim that this isn’t essentially the case and that Brexit would not make a difference to interest rates as the figures are decided by the Bank of England which are dictated by inflation.
More Budget for Infrastructure
Brexiters claim that if Britain were to leave the EU, the country would then free up money which could be invested into improving infrastructure. We have seen this have a positive effect on property previously, most recently with the expansion of the Crossrail rail link across London and the South East. Property prices have rocketed in areas along the line, and similar projects around the country could stimulate the housing market in much the same way. However, there are no guarantees that money from leaving the EU would be spent in this way, it could be up to the Government to decide how to invest any additional funds.
There have been numerous debates about whether or not Brexit will impact the availability of mortgages around the country. Some property analysts claim that lenders may stop offering higher loan to value mortgages, with the larger banks not wanting to lend more than 80% of the property value as they will want to wait and see how the market pans out. General lending criteria may also be adjusted to make it even harder to get on the property ladder. On the flip side there are some who believe that credit availability is a global issue, not a UK one, so Brexit wouldn’t affect people’s chances of borrowing.
Unfortunately, nothing is a set in stone when it comes to Brexit, and depending on your views it could either turn out to be a good or bad thing for the property market. Whatever your beliefs, there is certainly no doubt that today’s vote will be one of the biggest decisions which effects the coming generations. Whether you are in or out, make sure you have your say and don’t waste your vote!
If you are thinking of buying or selling, need a home report, or simply looking for advice on your local property market, please feel free to drop us a line on 0131 608 0175 or email us at firstname.lastname@example.org