The UK’s decision to leave the European Union has placed a great deal of uncertainty on Britain’s economic future. No doubt, this will lead one group of investors to prosperity while causing serious grief for another, particularly where the property market is concerned. To call Brexit a potential dividing line between financial success and failure for the many different types of property investors is something of an understatement, particularly where the UK housing sector is concerned.
Of course, whether the Brexit vote results in a dramatic win or a substantial loss from your own perspective will ultimately be decided by which side of the fence you have found yourself on.
Recently, the Nationwide Building Society published a report that indicated another fall in UK house prices, with most properties experiencing a drop in value of around 0.4%. This is the largest monthly fall in half a decade and the second drop within two consecutive months.
The blame for this has been directly linked to higher inflation and a notable fall in consumer spending, which have also combined with Brexit, along with a drop in GDP, to make matters worse for UK homeowners. Of course, this is not the ideal scenario for anyone looking to secure the public vote in the next election.
Both sides of the coin
The fact that house prices are falling is particularly concerning, especially when one considers the fact that UK mortgage rates are still at an all-time low. With UK unemployment also at a record low, most experts would predict that the housing market should be boosted in strength, with prices steadily increasing.
However, this is not the case, and this has meant that a large percentage of property investors and homeowners have had to sit back while their valued investments have depreciated before their very eyes. Again, this is good news for some and bad news for others.
For first-time buyers, the drop in house prices will obviously prove to be something of a major advantage. However, long-term property investors and existing homeowners will not be impressed with the status quo, although the worrying trend is expected to revert in the not-too-distant future.
Provided the Brexit vote proves to be less of a disaster than initially envisaged and the next general election ushers in a new term of government that helps the country get back on its feet, house prices could easily start to rise again at accelerated levels, although this could spell the end of the record-low mortgage rates that many investors have been taking advantage of.
Whatever actually happens next is anybody’s guess, so it stands to reason that it isn’t really in anyone’s best interests to take anything for granted in the UK housing market in the next 12 months, particularly when we consider the previous year’s events.