Commentary by Ruban Selvanayagam
Considering most of us shrug our shoulders when trying to understand the real implications of Brexit on our day-to-day lives, fathoming the ongoing direction of the property market at the moment is an even more challenging proposition.
The reality of failed predictions was no more highlighted when wide economic forecasts of a post-referendum house price crash failed to come into fruition. The leading post-Brexit house price indices have all demonstrated that values have remained broadly flat since the vote.
Yet, some argue that the real effects of Brexit on the economy and housing market have not played out yet – particularly given the country hasn’t formally untied its relationship with the EU.
Irrespective of what occurs over the next month, housing affordability (or lack of it) will remain a pertinent issue – particularly across London and the South East. Across these regions, the roll-out of quantitative easing and the ensuing low interest rates resulting from the financial crash of 2007-08 (alongside the Help to Buy equity loan) has meant that prices saw strong growth. With real valuations doubling in many parts of the capital, getting on the housing ladder is close to impossible for average earners – especially with mortgage down payments being so high. Office of National Statistics (ONS) measure of affordability (house price to median residence-based earnings), for example, grew from 8.4 in 2007 to 13.2 in London.
On the other hand, there are a number of regions where there’s good value to be had. Many areas across the Midlands, North Yorkshire and Humberside are affordable – given that these areas did not see the spurt of growth witnessed in the South. With remote working becoming more common, southern buyers are finding more bang for their buck in the coming years. This is provided that the Brexit doomsayer predictions don’t actually come true…