Economic Think-Tank Expect House Prices To Rise Following EU Referendum

Conveyancing experts at Irwin Mitchell say that the expected house price rise predicted by economic think-tank is a sure sign that property demand is still there despite Brexit worries.

The price of a home is expected to rise by around £40,000 in five years’ time despite “tremors” caused by the EU referendum result, according to the Centre for Economics and Businesses Research (Cebr).

The research suggests that while property values are expected to show weak growth over the next two years after Brexit, the general direction of house prices is still expected to rise - increasing the average UK house price from £194,000 in 2016 to £234,000 in 2021. 

The forecasters said despite “post-Brexit tremors,” house prices are set to increase by 5.7 per cent over 2016 as a whole. Before the EU referendum earlier this year, the house price growth was running at 8 per cent, but Cebr expect a slowdown towards the end of this year. 

The slower growth can be attributed to the economic uncertainty after leaving the EU and the three per cent stamp duty hike which came into force for buy-to-let investors on April 1.

In 2017, UK property values are expected to increase at a slower pace of 2.2 per cent, and in London, there is an expected fall of 5.6 per cent. However after this blip in 2017, London’s house prices are expected to grow again in 2018 and beyond. 

The researchers also said that foreign investors lost attraction in London’s high end property market well before the Brexit vote on 23 June. 

Beyond 2021, housing developments will rely heavily on economic and immigration policies that the UK will negotiate with the rest of the world, according to Cebr.  

Helen Hutchison, conveyancing manager at Irwin Mitchell, said:

Expert Opinion

“This is positive news despite what the UK residential property market has experienced over the last 18 months, with pre and post Brexit worries, and the recent stamp duty hike.

“The expected growth is a promising sign for the housing market and although growth has slowed currently, the market hasn’t completely ground to a halt – nor will it – as a lot of property purchases are not discretionary. Lives carry on and people need to move for certain circumstances such as jobs and for schools.

“I have experienced that the market is very much ‘business as usual’ in processing many transactions as buyers will not disappear, but we may see more and more would-be-buyers opting to rent in the short term to give them greater flexibility in an uncertain climate.”
Helen Hutchison - Partner & Chartered Legal Executive