A report by The Homeowners Alliance has cast a very interesting light on the Brexit situation across the UK property market. Using official data from the Office for National Statistics there seems to be a very clear pattern emerging across parts of the UK which voted to remain in the European Union and those which voted to leave. This price data would seem to blow wide-open claims that leaving the European Union is having a significant impact on confidence.
What do the figures show?
The data shows that the most prominent “remain” areas of the UK have fared markedly worse than their “leave” counterparts. This has culminated in Scottish property prices falling by 1.2% over the last six months, London prices increasing by just 2.45% and Northern Ireland prices by just 1.81% over the same period. At first glance these figures may not seem too worrying but when you compare them with the more prominent “leave” areas of the UK a definite picture begins to emerge.
The West Midlands has seen prices increase by 3.57%, East Midlands by 3.11%, North East by 3.34%, Yorkshire and Humber by 3.53% and East of England by 4.25%. These areas are listed using actual data from the Brexit vote with the strongest “leave” area listed first. So, while many would have you believe that Brexit is the worst decision the UK has ever made it seems as though some areas of the UK property market suggest otherwise.
Why the difference?
There are obviously many factors to take into consideration when comparing and contrasting the property price performance of those areas for and against membership of the European Union. Those with a bias towards Brexit are suggesting that the vote has given area such as the West Midlands greater confidence which is been reflected in demand for property. On the flipside of the coin, the Scottish property market has been extremely disappointing due to fighting between the Scottish government and its UK counterpart. This has resulted in a dramatic fall in confidence across Scotland which is being reflected in property prices.
We all know the situation in London, a market which depends to a large extent on foreign interest and the financial markets. It is not surprising to see London underperform the rest of the UK and there is no doubt that the next few months will be extremely challenging. However, those who have called the end of the London real estate boom might want to hold back until things are clearer.
Is confidence the key?
It is obvious that confidence in “leave” areas of the UK has had an impact upon the local economy and as such the local property market. Confidence is the key in any investment market and this has been reflected to a large extent in Scotland. Constant squabbles over an independence referendum, accusations that the SNP government has taken its eye off the ball and back stabbing over the European situation is having a detrimental impact upon Scottish businesses, the Scottish economy and the Scottish people – who are sick and tired of referendum after referendum.
The UK government and its regional counterparts will need to find a way to breathe some confidence back into the UK market as a whole and stop those areas which have underperformed from getting any worse.