The Impact of BREXIT on UK House Prices in 2021
The year 2021 is here and with it, the dreams and aspirations of those who wish to acquire property. At the same time as the UK finalises its separation from the European Union, economic changes, including those affecting the property industry are to be expected.
But how will BREXIT impact UK house prices in 2021?
BREXIT and UK's Property/Housing Industry- The Beginning
The commencement of the BREXIT has already triggered changes in the market. This was manifested in the noticeable rise in housing prices, which occurred the very same month as the referendum (June 2016). The separation was finalized on December 31st 2020, and so the property market has officially entered its post BREXIT era.
While the BREXIT process was in motion (2016-2020), house prices in the UK continued to experience a general rise in prices. Experts note increases of 8.2% in the initial stages (just after the referendum) and around 4.7% in 2020. But the question remains, will BREXIT impact house prices in the UK in 2021? And if so, how?
Mixed Predictions from the Experts
Some economists predicted a negligible effect of Brexit on 2021 housing prices. Some went as far as even to predict a fall in prices, quoting decline rates as high as 14% probably hinging their predictions on the fact that, while Britain is separating itself from the EU, it still intends to maintain the flourishing trade relations that have been established and nurtured for decades. In all practicality, therefore, BREXIT shouldn't have a detrimental impact on UK house prices in 2021 and beyond. But many of these pundits have since changed their tune.
Experts are now heralding economic uncertainty that will plunge the market into a domino effect of rising prices including those of the housing sector. The fact that the sector saw a sharp increase in prices in the last quarter of 2020 only served to strengthen these predictions. Some surmise that the climbing prices are being driven by an increased demand for houses in the post lockdown period and that this will continue into 2021.
UK Property experts have also had their say - Jason Harris-Cohen, Managing Director of house buying agency, Open Property Group, has stated that
"At present we have a magnitude of economic and political uncertainty, however until now the housing market has defied the gloom. A No deal Brexit will create further economic problems and significantly affect GDP. There is also the fear of the unknown, which will have a negative impact on consumer confidence, and in turn, spending and investment in the UK.
I believe that the market in London and the south east will contract, however I think the Fundamentals for Northern properties are resilient as yields are strong and there is an emphasis by MP's to support the economic growth of the Northern powerhouse."
The economists at the Centre for Economics and Business Research have predicted an approximately 14% fall in 2021 house prices. This prediction is hinged on the fact that the government's temporary cut on stamp duty is drawing to an end and the expectation that the coronavirus pandemic's impact will gradually dissipate.
What It All Boils Down To
Therefore, BREXIT is far from being the only consideration for property stakeholders to consider as 2021's house prices will undoubtedly be impacted by several other factors such as the COVID19 pandemic. If the demand remains strong, residential UK property prices will also see a boost, and if the opposite occurs, prices will fall. Predicting this demand is tricky, though, as buyers currently motivated by the measures implemented by the government may not be so eager as things change in 2021.