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A stable government for the next five years and clarity on Brexit are both good news for the housing market.  As a result, average prices are predicted to rise by up to 15% over the next five years.  Here are some of the key factors which could influence that growth.

The “Brexit bounce”.

Houses are long-term purchases.  There are lots of reasons for this, but most of them revolve around the fact that buying one usually involves a number of up-front costs (e.g. surveys, conveyancing and Stamp Duty) and, it has to be said, corresponding administrative work.

This means that you generally want to be sure that you can stay in one for at least five years before you even contemplate a purchase.  First-time buyers have extra reason to be cautious before they buy because they have the potential to qualify for a Stamp Duty discount, but this only applies to their very first purchase.

Additionally, the fact that most buyers need mortgages means that they have to think carefully about their ability to service a mortgage over at least five years (which will be checked by a lender in any case).

For all of these reasons (and more), the extended delay over implementing the result of the Brexit referendum has really acted as a strong brake on the housing market.  Hopefully, the fact that Brexit is now finally happening (regardless of your views on it), will allow both potential buyers and potential sellers to make plans in which they can have some degree of confidence.

Given that peak home-sales, periods are spring and autumn and that it can take some time for sales to move to completion (especially when chains are involved), it is likely to be 2021 before any “Brexit bounce” feeds through into actual sales figures.  It will, however, be interesting to hear feedback from property professionals over the course of 2020 as this could be a good indicator of what is happening “on the ground”.

Significant investment in transport infrastructure

HS2 looks set to go ahead.  If HS2 is cancelled then it’s probably reasonable to assume that there will be alternative investments in transport infrastructure.  There is very likely to be a focus on continuing to develop the infrastructure in the north of England.  This will be partly for economic reasons (to encourage growth in the area) and partly for political ones (to hold on to electoral gains).

On a similar note, the expansion of Manchester Airport is already going ahead.  In principle, the third runway at Heathrow should also go ahead, but there is always the possibility that this will be cancelled, possibly to placate those who are opposed to HS2 on cost and/or environmental grounds.  Crossrail, however, is already underway.

Since none of these developments is complete (in fact neither HS2 or the third runway at Heathrow are actually under construction yet), it’s impossible to say what specific benefits they will bring.  It is, however, fair to say that improvements to infrastructure, especially transport infrastructure often lead to increased house prices along the route, particularly near to stops.

Economic stability (possibly growth)

The fact that the “Northern Irish issue” appears to have been resolved (or, at the very least, that there is a path to resolution), should hopefully make it much easier for there to be a smooth transition out of the EU.

It is probably fair to say that the EU’s desire to encourage members to remain in the block rather than going it alone will have to be balanced with a pragmatic approach to keeping trade flowing between the UK and the single market.  It’s definitely fair to say that the UK has long traded on a global basis and hence should be able to continue to do so successfully.  If this is the case and there is, at least, economic stability, then this is likely to have a positive impact on the housing market.

Your property may be repossessed if you do not keep up repayments on your mortgage.

 

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