What does brexit mean for UK property?

mwpt

I'm speaking specifically from a London context. The rest of the UK I don't know much about.

I think the Pound has more to fall over the next year or two. Short term volatility up or down but trend is down. I don't think this will prompt the government to increase rates. They were happy to sit on a 20+% fall in 2008. I feel they may try one last swing of the bat with lower interest rates in fact. I don't know what will happen with immigration but if the economy tanks even more and job losses start piling up, I guess brexiters will get their desire as people will stop wanting to move here. So immigration may fall a bit from EU but increase from non EU. Again, a government isn't going to want to make a recession worse so don't see this changing much.

What will the government do about a potential recession? Whoever the leadership ends up being, we know every government has a precedent for using house prices as a tool to stoke the economy.

So, interest rates potentially down (makes mortgages cheaper), Pound severely devalued (makes London property cheaper for external investors), immigration not much different. These are all upward pressure on house prices in local currency.

But sentiment is the big unknown. Do people want to bet on increasing house prices when they don't know which direction the country or economy will be heading?

So basically, some upward pressure and some potential downward pressure. I can't quite predict.

Guess: Short term, outward to six months, prices down. Once rates are cut, money printed, Pound devalued, upward pressure again.

HornetSaver

Speaking specifically from a London context?

My prediction would be prices stabilizing for the next six months due to uncertainty, then rising even faster than this year for the following 18-24 months whilst the migration door is still open (given that the vast majority of those moving to the UK in this period will be looking at the London area). After Brexit is completed... who knows.

Out,_Vile_Jelly

My rate is fixed til Oct 2018 and I'm overpaying by the maximum possible. If prices drop I'll move to a house in a nicer area if that becomes affordable.

danslenoir

Shares in Banks and House Building companies are being hammered. Sterling falling will mean property will become more expensive (in relative terms) for foreigners.

I think Brexit will almost certainly have a downward effect on house prices - though whether that's of a magnitude that would result in price falls, or just a slowing of growth, I don't know.

Although I'm lucky enough to be a homeowner (with not an insubstantial mortgage) and would be hit personally, I recognise that there is a strong case to be made for this being a good thing.

On the flip side (for me anyway), at least interest rates will stay low, and there are already suggestions of Bank of England base rates being cut to 0% over the Summer.

marathonic

danslenoir wrote: »

Shares in Banks and House Building companies are being hammered. Sterling falling will mean property will become more expensive (in relative terms) for foreigners.

How is it more expensive? Last night, €131,000 would have got me the money needed to purchase a £100,000 house. Today, those same euros will buy that house, with over €6,000 in change.

theEnd

Who would buy a house in London right now?
Future population growth, jobs and investment in serious doubt.

mwpt

House builders amongst the largest falls in share prices along with banks and other finance. And interestingly, though I guess not surprisingly, airlines also hit hard:

http://www.hl.co.uk/shares/stock-market-summary/ftse-100/fallers

So does this mean the market expects profits in property firms to be down?

Crashy_Time

When the rest of the EZ starts to disintegrate, and interest rates start to become out of the control of a few central banks, that is when house prices will start to tumble IMO.

mwpt

Crashy_Time wrote: »

When the rest of the EZ starts to disintegrate, and interest rates start to become out of the control of a few central banks, that is when house prices will start to tumble IMO.

If that happens, then yes, I agree with you. Interest rates are key. The supply demand argument is useless when your mortgage repayments double.

The big question is, are central banks really in charge of borrowing rates or will the market squish them like a bug in the end?

cells

its not certain yet what an exit will look like. If the UK leaves the EU but keeps free movement free trade and the membership fee what will change?

Crashy_Time

mwpt wrote: »

If that happens, then yes, I agree with you. Interest rates are key. The supply demand argument is useless when your mortgage repayments double.

The big question is, are central banks really in charge of borrowing rates or will the market squish them like a bug in the end?

I think they have managed to beat the market so far partly because of the countries tied to the euro, as the U.S, U.K. EZ and Japan have been coordinating efforts to suppress market forces? Start having a large number of countries in Europe with their own currency again and you can`t control it in anything like the same way?