There are many strong opinions with regards to Brexit and how this might impact the UK housing market in the short, medium and longer term. We have seen some doomsday scenario expectations and those who believe it will be “business as usual” for UK house prices. However, statistics do not lie and we have taken a look at the Land Registry figures which have been updated up to June 2017 as they lag a couple of months behind. So, has the performance been as bad as some people suggest?
The Land Registry data
As this data is based on actual sales prices reported to the Land Registry many believe it gives a better picture of the UK market. It has been in existence for many years now and proven to be an extremely valuable source of information when looking at trends.
House price index
The house price index is an all-encompassing index which gives you an idea about the performance of house prices over a specific period of time. Between June 2016 and June 2017 the index has risen from 111.65 up to 117.09 which is an annual increase of 4.87% – well above inflation. During that period there have been four months of negative growth which occurred in September and October and again in January and March. While the best month was April 2017, showing monthly growth of 1.66%, we have not seen any wild jumps in house prices like those seen in years gone by.
Average UK house prices
As the UK house price index is based on the average house price in the UK the result has again been an increase of 4.87% between June 2016 and June 2017. This equates to an increase from £212,887 up to £223,257. The comparable annual performance of each month has certainly started to tail off starting at 8.7% in June 2016 and gradually falling month by month until January 2017. There was then a small rise to 5% annual growth in February although this fell away to just 3.88% in March. We then saw a move upwards to 5.05% in April 2017 with the next two months showing slowing growth of 4.99% and then 4.87% respectively.
While the house price index/average house prices in the UK continue to rise there is no doubt that growth is starting to fall back. As we await figures for July and August we can likely expect further downward pressure on house price growth amid concerns that Brexit talks are beginning to stall. However, many experts believe that house prices will not fall too far back because of extremely cheap finance with interest rates so low.
Caution is the watchword
There will always be a strong core demand for houses across the UK as the population grows and will continue to do so even after Brexit. Many people are under the misapprehension that immigration from Europe will simply hit zero once the UK leaves the EU but this is simply not the case. When you also take into account immigration from other parts of the world it is unlikely that the UK population will stop growing.
Investors may well be cautious at this moment in time amid concerns of a hard Brexit and talk of “falling off a cliff” but the UK has been through far greater economic challenges than this before. The fall in sterling over the last 14 months or so has also offered some support with overseas buyers receiving a 20% discount bonus on currency exchanges. So, while no one really knows what the future holds in light of Brexit it is highly unlikely to be anywhere near the doomsday scenarios being broadcast by the Remain media.