Five years on from the Referendum, it’s time to take a look at the post-Brexit property markets. The question is – have they really taken the hit that was predicted?

The short answer is no, but neither could any of us have predicted quite how tumultuous the years would be, following the vote to leave the EU. After the Brexit negotiations dragged on and a resolution was eventually reached, we also had two General Elections and a global pandemic to contend with. All of these events threw the global economy into disarray and left many questions marks over the future of the UK property market.

Long-term Capital Growth

While we can never know what would have happened without such an unsteady economic-political background, what we do know is that the uncertainty itself fuelled major property purchase and investment activity. The doom-mongering predictions made about the property market back in 2016 have simply not come to fruition. According to the Office for National Statistics, the average UK house price in June 2016 was £212,887. By March 2021, this number had risen by more than 20 per cent to reach £256,405.

The market is currently enjoying a boom and there are a number of factors fuelling the movement. First, we have seen that even during the most tumultuous times, bricks and mortar investment represents a safe haven asset and the UK market has retained its highly-sought-after status in the eyes of local and global investors. We are also seeing investors playing the long game with a focus on long-term capital growth – this is another factor contributing to the fundamental success of the property market.

The Stamp Duty holiday also prompted a flurry of market activity which allowed buyers to save up to £15,000 in tax on house purchases until 30 June. Record low interest rates and a supply-demand imbalance have also contributed to making house purchase far more accessible. All of these combined have worked to push against any potential negative impact our departure from the EU may have had on the property market.

In fact, we have simply seen prices continue to increase. Figures from the Land Registry show that the average price of a property in the UK rose by 10% year-on-year in May to reach £254,624, while Rightmove’s house price index from July shows that average asking prices had risen by 0.7% month-on-month and 5.7% year-on-year.

Buy to Let Reforms

There have been other key changes introduced to the market in the past five years, most notably in the buy to let sector. With reforms including an additional 3 per cent stamp duty surcharge introduced for second homes, a tapered reduction in mortgage interest tax relief and new regulations brought in for houses in multiple occupation (HMOs), the face of property investment has changed beyond all recognition. However, once again the market has shown its resilience and demand for buy to let investment opportunities remains high.

Research by the FT Adviser reports that the National Residential Landlord Association’s quarterly Landlord Confidence Index shows increased levels of confidence among landlords in both Q4 2020 and Q1 2021. Further research shows that more than a third of UK landlords had either purchased another buy-to-let property in the past year or intended to buy one within the coming nine months.

Competitive Mortgage Rates

For those looking to take out a mortgage, now is a good time. As the stamp duty holiday is set to come to an end in October, we can reasonably expect to see prices level out but experts are predicting a slight drop as opposed to anything more serious. And as we return to a market guided by more conventional demands and dynamics, the future remains bright. While the supply-demand imbalance doesn’t look set to dramatically change anytime soon, we are also seeing the mortgage market growing more competitive once again.

After the number of deals dropped during the height of COVID-19, recent data from Money facts shows that average rates are falling, with some banks offering mortgages at rates below 1%. There are also more opportunities emerging for buyers at all levels, such as the 95% mortgage which launched in April and allows buyers to get a step on the property ladder with just a 5% deposit.

Finding the Right Mortgage

It’s clear to see that the Brexit vote and our final departure from the EU has not adversely affected the property market. It has continued to enjoy positive activity in spite of the Referendum with events such as COVID-19 and its associated changes in homebuyers’ preferences having far more impact, with all changes travelling along a positive tract.

The typical UK home is now worth £23,000 more than just a year ago – the highest house price inflation in 14 years since just before the 2007 financial crisis. All this works towards boosting borrower affordability and confidence for another positive impact on the market. House buyers were confident to make decisions during the pandemic and we expect this confidence to remain for the foreseeable.

With so many different deals and opportunities available, it really pays off to invest in the services of an expert when it comes to finding the mortgage deal that’s right for you. Our expert mortgage team act as your brokers and offer a comprehensive end-to-end service informed by holistic, independent advice and an unbiased market approach. We undertake complex research to uncover the most high-value, cost-effective deals and products at the most competitive rates, with key features to fit with your needs. Contact us today to find out more about our process.

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The information contained within this communication does not constitute financial advice and is provided for general information purposes only. No warranty, whether express or implied is given in relation to such information. TR Wealth shall not be liable for any technical, editorial, typographical or other errors or omissions within the content of this communication.