Ever since the UK voted in favour of Brexit the housing market throughout the country has cautious waiting to see what will happen. In some parts of the country prices have fallen dramatically whereas in others it has been largely unaffected. For nearly a year the prices have grown by less than a percentage point. However most experts are still waiting for the bottom to fall out of the housing market.
Boom or Bust
With less than a month to the deadline it could make October a busy month for the housing sector. If a deal comes to pass then the housing market may rebound and sales will start moving again. There are experts who say that if a deal doesn’t come to pass prices and sales could drop as much as 10%. Even with the unrest surrounding Brexit areas like the Lake Districts have seen housing prices increase by just over 8% which is fantastic in any economy. That doesn’t mean that agents aren’t worried about the future.
Waiting to See What Will Happen
Experts estimate that more than 3 million residents are waiting to make a home purchase until the Brexit deal has been reached. Potential homeowners are being cautious, they don’t want to be stuck with a mortgage over the value of the home. Agents are starting to feel the pain of the slowdown as business grounds down to a halt. With the deadline looming, only a few weeks away it makes sense for buyers to just wait and see how the situation will turn out. Here is a look at what experts have to say about Brexit and the UK housing markets.
There are people who believe that the October deadline won’t change anything and there are parts of the market that are doing well regardless of the political situation. Families are still needing to move because of job changes or other circumstances and they cannot afford to wait for Brexit to make a move. The UK still faces a housing shortage with families’ still needing homes. There are fewer buyers in the market but those that do take the time and energy to go to viewings are more serious about putting in offers.
The long term effects of Brexit on the housing markets still remain to be seen and much will depend on whether a deal gets done before the deadline. Hopefully the market regains its equilibrium quickly.
To say the UK has a housing shortage is a pretty big understatement. In fact you will be hard pressed to find an expert who disagrees, but what is the reason for the UK housing crisis and what can be done about the problem. The issue isn’t complicated, there aren’t enough affordable housing options for everyone living in the UK.
The Government’s Role
Even the government acknowledges the problem and the Housing Secretary acknowledges that affordable housing is the biggest challenge that he faces. While the issue is complicated at the end of the day more new homes have to be built. However that is a gross oversimplification of the problem, how and where these houses will be built is a part of the problem. Back in 2017 the government pledged to build 300, 000 homes by the mid 2020s with the national housing agency Homes England tasked with carrying out the ambitious endeavour.
Will it Be Enough?
Despite the ambitious goal of building more than 300, 000 new housing units per year the National Housing Federation says that is not enough. That at least 340, 000 new homes are needed each year. Not only do they need to be built they also need to be properly allocated with a large portion of these going to social housing projects, a smaller portion for intermediate priced housing and the remaining to be used for shared ownership.
Because the shortage has reached critical levels the existing houses in the UK have shot up in prices. The average price of a piece of property in the UK is nearly 250, 000 pounds and that is a 4.2 percent increase over previous years. The problem is much worse in cities like London. London in particular has another problem and that is empty homes. There are more than 200,000 vacant homes across the country with many being owned by foreign investors. To try and reduce the amount of empty houses the various councils introduced the Empty Dwellings Bill which can double the amount of property taxes for units left vacant
Can’t Buy Property
Houses throughout England and Wales are on sitting at 8 times the average salary, leaving millennials with no way to get a foot onto the property ladder. That is keeping that generation in rental units rather than getting a mortgage. The rental market has more than doubled since the 90’s with 20 percent of UK houses being used as private rentals. In London specifically rent takes a massive 49% of the household income, making saving for a deposit nearly impossible.