Will House Prices fall after Brexit?


The property price boom that we have witnessed in the UK in the past year will probably come to an end due to the success of the Brexit referendum, according to many real estate analysts and agents. Many of the transactions will be put on hold and the quick price rises witnessed in the last 2-3 years will be halted in their tracks.

 

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The shares of house builders have already been affected and commercial property owners can expect the same. According to Richard Donnel, one of the directors at Hometrack, “it is still very early to tell what will happen, but one thing is for sure, buyers and investors will be more cautious in the next few months and their caution will affect the national economy.”

Other experts say that we can’t expect price growth in 2016 and others are forecasting that prices could fall by up to 5% in the next two years. Of course, since these are just predictions no one can tell for sure what is going to happen, but some analysts say that the negative impact will be even greater. Some of them even believe that the price of the average home in the UK will be worth £20K less by the end of 2016.

These predictions are based on the changes we have witnessed on the real estate market in the UK whenever some external shock has affected the British economy. In previous scenarios, the sales volumes have dropped for 10-20%.
London, as one of the biggest real estate markets in the UK, will be affected the most, especially in central London. Foreign investors may also avoid the UK in the next period even if the pound goes down because of the current uncertainty. The intervention of the Bank of England could resolve this situation, but only to some extent. It is also worth mentioning that office rents in London are expected to go down too.

Despite the groundswell of negativity there are some experts who believe that these predictions are just a result of the initial shock and that things will calm down and ultimately be better in the long run. It will be interesting to see how things develop over the forthcoming months.