Housing Market to Slow Down but not Plummet Following Brexit

Despite the uncertainty caused by the Brexit decision, house prices still look likely to increase by 5.7% on average during 2016, according to the Centre for Economic and Business Research (Cebr).

However, Cebr highlights that because average prices increased by 8% year-on-year in the first quarter of the year, a slowdown in the increase is likely to be seen in the last six months of the year.

According to Cebr, market uncertainty following Brexit and the stamp duty changes affecting second properties are mainly responsible for this expected slowdown.

Cebr has downgraded its house price predictions in the short-term to just 2.2% growth during 2017, but in the medium term it expects this to increase as the post-Brexit position becomes clearer.

“Although Brexit has certainly sent shockwaves Cebr expects the housing market to slow down but not plummet,” explained Nina Skero, Cebr Senior Economist and main author of the report.

“Years of underbuilding mean that demand would have to fall very dramatically to meet the low level of supply increases,” she said. “Keeping in mind that construction companies are very likely to limit their output further in light of Brexit, price pressures will also come from the supply side.”

“Property in London will, however, be more impacted than elsewhere in the country,” she added. “The capital’s status as a safe haven is under threat, a relatively high share of its residents are non-UK nationals and the sectors facing the greatest uncertainty following Brexit e.g. finance are concentrated in London.”

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