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You are here: Home Focus Will a hard Brexit destroy the UK property market?

Will a hard Brexit destroy the UK property market?

31 May 2017, 16:43 CET

With so much uncertainty on what Article 50 will bring it is impossible to predict with any real certainty what might happen to the property market once the UK is out of Europe.

Property market

Brexit has already been a very slow process, with negotiations and arguments set to drag on even further as politicians try to thrash out the best deal for the UK.

Since that historic referendum, almost one year ago now, there is marked decline in house sales across the country.

The property experts at GoodMove.co.uk estimate that more than one million UK adults have shelved plans to purchase a new property because of the vote to leave the European Union.

UK housing transactions in the second half of 2016 were 9% down on the same period in 2015, and the leave vote seems to have had an impact on confidence in the housing market.

But it has not been a uniform reaction, with houses price growth in London now less than in other major cities around the country, although annual price rises of more than 5.5% are still not uncommon in the capital.

Analysts predict that buyers may well be more cautious in London than elsewhere due to the prices involved and it would not be a surprise to see prices stagnate for at least a couple of years while Brexit unfolds.

With so much uncertainty regarding the future, the number of house sales may well decrease year-on-year, with families more likely to put an extension on to their existing house at less than the cost of upping sticks to a new property.

This will obviously add value to the property and make it a more attractive proposition with buyers down the line.

It is well known that there is a lack of affordable housing in the UK and, despite the government making all the right noises, it is a problem with no quick fix.

Brexit has the potential to see people moving back to the UK from continental Europe, which will only put more pressure on the housing market.

Thousands of elderly Britons living in Europe may be forced to return to the UK unless the government guarantees that their healthcare will continue to be reimbursed by the NHS.

There are more than 100,000 British pensioners in Spain who, at present, can access medical treatment for free, or near free, in countries such as Spain, France and Germany.

Many opted to move abroad to a warmer climate for health reasons but might have to return due to the uncertainty.

They will all have to live somewhere and it may be that private landlords will be rubbing their hands with glee as pensioners will be unable to afford to buy in the UK.

Brexit has clearly already had an effect on the UK housing market but there is still a long way to go before the full ramifications of leaving the EU are known.

Some people will benefit while others are bound to lose out and the hope is that the government is able to negotiate a deal that will lessen the blow for the latter category.

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