An expert predicts that if a ‘no deal’ Brexit negotiation goes ahead, there is a 30% chance of the housing market crashing.
Falling House Prices
The chief executive of Octane Capital, Jonathan Samuels, explained that a mixture of high inflation, a lack of disposable income to spend on household bills and the rise in interest rates, are prominent factors in many potential buyers minds making them less likely to make offers on houses.
UK House Prices
Housing prices in London are likely to decline this year and into 2019. However, it is predicted that the housing market could crash altogether if no deal is reached in Brexit.
A poll carried out by Reuters stated that in London house prices will fall by 1.6% in 2019 and are set to fall even further, by another 0.1% through 2019.
In comparison, the rest of the UK are set to see an average increase of 2% throughout the next two years, and an even higher 2.3% in 2020.
The Bank of England have increased their interest rates to 0.5%. This is the highest it has been since the financial crisis in 2008. They are set to increase their interest rate gradually over the following few years.
Average house prices in the UK currently stand at £301,973 while in London, it is a staggering £609,205.
These figures show how currently housing appears to be overvalued.
House Prices and Brexit
This week saw the largest drop in Pound Sterling against the Euro in a year. In theory this low exchange should be attracting foreign investors to the UK. However, with the uncertainty of the Brexit deal looming, it is keeping these possible investors away.
Rightmove recently released data that showed that the asking prices of houses in August fell by a significant £7,000. This was due to more houses entering the housing market and increasing the competition for new time buyers.
Andrea Fairweather, Partner at Birchall Blackburn Law says:
‘House prices have been stagnant for a while, and even dropping as was shown by the £7,000 reduction to asking prices in some areas. However, with the rise in interest rates, and the uncertainty around the upcoming Brexit deal, it is uncertain how this will impact housing prices. We’re hopeful that it will have a positive effect on prices and that they will slowly begin to rise again.’
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