The UK property market has had some time to assess and digest Brexit’s impact on property prices and what this could entail.
Back in the summer of 2016, the UK public voted to leave the European Union but it wasn’t until 1st January 2021 that the agreed deal for this departure came into effect. It followed months of negotiation between the UK government and the EU over the terms of the deal.
Now we’ve had some time to assess the property market following Brexit, what has its impact been?
In the initial wake of the Brexit vote, property prices stalled briefly then continued to rise, albeit at a slower pace in comparison to previously recorded figures. According to research from Nationwide, the average price of a UK home increased by 0.5% in July 2016, compared with June 2016. This was up 5.2% compared to a year earlier, taking the average UK home value to £205,715.
Since then, demand for property has continued to rise with the average house price increasing to £253,000 over the course of 2020.
As the UK property market is governed by laws confined to our domestic market, Brexit’s impact has been limited. Instead, the effects of the EU departure can be more obviously be seen in UK trade, business and commercial operations.
COVID-19 vs Brexit
Instead, the impact of Brexit has been overshadowed by that of the COVID-19 pandemic.
COVID-19 quickly changed the property market by effectively closing it for seven weeks during the first national lockdown that started in March 2020. The Bank of England had to lower interest rates to 0.1% to support the economy.
Since then, a series of measures from Chancellor of the Exchequer, Rishi Sunak, has helped to keep the property market stimulated.
Stamp duty tax extension
The UK government’s decision to cut stamp duty tax has had a huge impact on ensuring property sales keep happening. This was first announced in July 2020 and, as lockdown restrictions have persisted, the cut has been extended. It will now run until 30 September 2021.
According to Nationwide, UK property prices have accelerated at their fastest rate in almost six years.
This has, in part, been attributed to the economic stimulus put in place by the Government, alongside lifestyle changes now sought by many as a result of the lockdown.
Many of us have re-evaluated how and where we live if there is no longer a need to travel to work as a result of lockdown restrictions.
What's next for the property market?
So, what does the future look like for the UK property market? It is still difficult to predict what might happen next, or at least after the stamp duty tax holiday ends in September this year.
The UK economy saw its biggest crash in output in more than 300 years in 2020 when it slumped by 9.9%. Although the property market has been saved by the Government’s intervention and a wider economic recovery is anticipated in 2021 as restrictions ease, many commentators are tentative about predicting the future. Rather than Brexit, the future of the property market is more closely connected with the effective roll-out of the COVID-19 vaccination programme; for now, the property market is still moving.