Housing in a ‘No deal’ Brexit scenario

property market brexit_red

Britain’s drifting property market would probably take a hit from a disorderly Brexit, with average prices slipping about 3% nationally in the ensuing six months and as much as 10% in London, a Reuters poll of housing experts found.

Roughly 85% of respondents said both UK and London house prices would fall in the six months subsequent to leaving the European Union without an agreement. But if Britain departs the EU with a transition deal – the scheduled leave date is Oct. 31 – house prices are due a mild 1.5% lift over the following two quarters. They would rise 1.4% in the capital. Results from the August 13-20 survey show an otherwise tepid outlook for national price rises in coming years, at rates not far off an already-mild consumer price inflation rate and despite the recent sharp fall in sterling. Indeed, the results suggest that foreign demand for property will be weaker than in previous years where declines in the pound have spurred buying, particularly in London, as it makes housing cheaper for those holding stronger currencies. The survey also indicates in the near-term at least that housing, the bedrock of British household wealth, is not likely to give a lift to the economy, which contracted for the first time in 6-1/2 years in the second quarter.

Roughly 85% of respondents said both UK and London house prices would fall in the six months subsequent to leaving the European Union without an agreement. But if Britain departs the EU with a transition deal – the scheduled leave date is Oct. 31 – house prices are due a mild 1.5% lift over the following two quarters. They would rise 1.4% in the capital.

Results from the August 13-20 survey show an otherwise tepid outlook for national price rises in coming years, at rates not far off an already-mild consumer price inflation rate and despite the recent sharp fall in sterling. Indeed, the results suggest that foreign demand for property will be weaker than in previous years where declines in the pound have spurred buying, particularly in London, as it makes housing cheaper for those holding stronger currencies.

The survey also indicates in the near-term at least that housing, the bedrock of British household wealth, is not likely to give a lift to the economy, which contracted for the first time in 6-1/2 years in the second quarter.