Uncharacteristic house price fall shows how Brexit affects market

Uncharacteristic house price fall shows how Brexit affects market

Many people across the nation were shocked last week when the Leave campaign took a slight lead for the first time in the polls surrounding the EU referendum, after it had seemed for so long as if the Remain campaign was moving towards a certain, if unconvincing, victory. 

However, as the big day on June 23rd draws ever closer, it seems that the uncertainty this vote is causing in the property market is more prominent than ever. In May, according to the latest house price report released by Your Move and Reeds Rains shows, the price of purchasing a home experienced a very uncharacteristic fall.

The average house price nationwide actually fell by a surprising 0.4 per cent in May when compared to April, which represented the steepest fall in nearly five years, with November 2011 having been the last time the market experienced such a negative.

This drop, although likely temporary, is indicative of what the uncertainty in a political sense can mean for the market, with most people, be they investors or property buyers, now apparently adopting a wait and see attitude that is slowing the property market greatly.

Adrian Gill, director of Your Move and Reeds Rains estate agents, said that the way the government had treated landlords at the start of this year, increasing taxes, had caused a surge for properties that had now died down. But while this had an effect on the market, he conceded that the election was also looming large over the market as a whole.

“That tax hike and the Government’s anti-landlord policies are weighing down the market, but the main factor is short term confidence ahead of the 23rd June referendum,” he said, adding that many people are worried about the potential for a ten per cent fall in house prices, as warned by George Osborne, should the UK vote to leave the EU.

Simon Rubinsohn, RICS chief economist, said similar when discussing the potential for Brexit, saying that uncertainty is causing a problem now that could be exacerbated by a leave vote later this month.

“It appears to me that what we are looking at is a short term drop caused by the uncertainty resulting from the forthcoming EU referendum coupled by a slowdown following the rush to get into the market ahead of the tax change on the purchase of investment properties,” Mr Rubinsohn said.

This article has been provided by Experience Invest.