Brexit and The UK Housing Market

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The UK government remains in chaos.

Subsequently, the current uncertainty is impacting the future of the UK in more ways than one. 

We continue to dwell on crucial questions regarding Brexit, and the ripple effect it will have on our economy and lives. Following Theresa May’s deferred MP’s vote on the current Brexit deal - as well as a vote of no-confidence - it is clear to say the future of Britain remains uncertain. This has led to economists predicting what will happen in the various potential scenarios which may occur and preparing for a range of different outcomes.

As a result of Brexit turbulence, the UK property market is at its weakest since 2012. This is largely due to house prices being 9.7 times that of the UK national average salary - a significant jump from 1997 when house prices were 4.6 times that of the UK national salary. Furthermore, it is the demand from international investors as well as the government’s help-to-buy scheme which is causing the house price growth. A combination of Brexit uncertainty and reaching the proverbial ceiling for affordability is pushing a growth for individuals renting.

However, experts predict house prices will stagnate in 2019, whilst the rental market will face the most change. The number of individuals renting is greater than ever, this is particularly definitive amongst millennials whom most of which (half, in fact) will likely be renting into their 40’s. 

Unfortunately, the supply of rental accommodation is dwindling as the demand continues to grow, urging landlords to make the most of their property’s space to fit in as many tenants as possible.

Hence, the rise of the studio flat.  

For many, gone are the days of the living room, as landlords opt to transform spare rooms into bedrooms in order to drive profit and optimise any spare space. With the help of the humble sofa-bed,  upholstered folding chairs and a pop-up table it makes for a suitable living space in the ever-growing rental market. Consequently, this decrease in rental property availability means rental costs are likely to creep up, with a 2% increase predicted in London for 2019 and a 15% increase over the next five years.

Tremendous for landlords, displeasing for tenants.

Despite these reports, Brexit conveys unpredictability across many sectors and no one knows for certain until it unfolds.