Regardless of one’s beliefs about the wisdom behind Britain’s 2016 referendum to leave the European Union, its economic impact remains difficult to foretell. However difficult, informed economic forecasting is required to be adequately prepared for the fallout from Brexit, whatever that may be.
This volatility may be no more noticeable than property values. The uncertainty over the prospects for a no-deal Brexit has caused house prices in the UK to fall significantly particularly in London where foreign investment drives a large part of the market. The question for many home buyers and householders is whether this is nice or bad.
Predictions of the rate of decline in UK property values vary widely. A modest prediction suggests a 6 percent drop, while the Bank of England predicts a far more dramatic rate of 30 percent. Still others ask for a higher percentage. Unless consumer confidence about Brexit remains high, thereby stabilizing the market, just about all models show a decline.
Forbes recently proposed that as property values fall (before and after Brexit), the UK housing market will remain in demand as “low supply will offset sharp price drops.” In other words, there is a chance to increase home purchases given the potential “bargain” of the property. In addition, mortgage approvals in the UK reach a two year high just last summer, indicating that the property market is becoming more competitive as Brexit approaches.
While property values may be maturing in the UK, buying a home means much more than buying a residential building. Apart from numerous related taxes, renovation and cosmetic repairs to kitchens, bathrooms, etc. It needs to be taken into account, making the actual cost of owning a home greater than the sheer value of the property at the time of purchase. These additional expenses can increase total cost of home ownership more than 20 percent above property prices alone according to an analysis conducted by soak.comand should be taken into account by the savvy home buyer.
Brexit may be great for the UK housing market, but before buying that London country townhome or cottage, do your homework first.
