The Impacts of Brexit on UK Real Estate

After the Brexit referendum took place,  it’s fair to say that the UK has felt its ripple effects across various sectors. This couldn’t ring truer for the British housing market, which has been under considerable scrutiny in a new post-Brexit reality. 

Brexit’s implications span from economic shifts to changing immigration policies and understanding these changes is imperative if you’re considering making a new start by buying a house. This can help you decide whether it’s the right time to buy and what destination is best for you.

Housing Prices 

Back in 2016, it was feared that housing prices could fall by 18 percent, foreign investors would abandon the UK and half a million drops would go down the drain. Naturally, this caused property market jitters. While these initial dire predictions have been tempered, property prices jumped straight after the deal was finalised – good for property owners, not so great for buyers in the market. 

That being said, recent studies show that housing prices are no higher today than they were in late 2015. In fact, some areas have experienced a drop, especially in some of London’s most desirable and expensive boroughs. 

Mortgage Rates 

Initially, mortgage rates decreased since the Brexit vote. Standard 5-year fixed-rate mortgages were reduced from 2.54 percent to 1.7 percent in May 2020, which was great news for first-time buyers. Since then, however, inflation has seen mortgage rates rise once more. 

The average two-year fixed rate is currently just over 5.75 percent. While this has fallen from its peak of 6.86 percent in July 2022, it is still historically high. This can be blamed on a variety of factors, including post-pandemic disruptions, the Ukraine-Russia war and supply chain disruptions. 

Emerging Areas 

There have been regional divergences in housing prices since the finalisation of Brexit. Locations in the East and Northwest of England have seen considerable levelling up, although there is speculation that this is due to affordability pressures rather than the result of Brexit.

In any case, areas such as Waltham Forest in East Suffolk and Hastings are experiencing stronger price growth. This is in comparison to property in London where housing prices have fallen since the vote. 

UK Housing Market vs. EU Housing Market 

Regardless of Brexit, the UK property market is faring compared to its EU counterpart. The average cost of a two-bed flat in the UK is £263,000, compared to Europe’s of £193,000. This means British property owners are spending 35 percent more than European buyers, which is the equivalent of an extra £70,000 .