Over 18 months have passed since the UK electorate voted for Brexit, by the slimmest of margins, and a little over a year before the UK officially withdraws from the European Union. It’s no surprise then that a palpable sense of uncertainty—anxiety, even—is continuing to grip the country, with many wondering how this move will affect their day-to-day lives in the long term.
There is even outright fear, with the public dreading a decrease in the value of housing in the coming months, according to a City A.M. article. This fear is apparent in the survey conducted by the Centre for Economics and Business Research (CEBR), which shows the index of house value expectations slumping to 131.4 points, the second-lowest result since July 2016, or a month after the Brexit vote. Although, according to the CEBR, the reading remains well above the 100 points benchmark that indicates overall negative sentiment. Still, its continued nosedive is undeniable proof of a waning in consumer confidence that the value of housing will rise.
Note, though, this drop in house prices may very well be the law of averages catching up with the housing sector, which has had an “extraordinary run of asset price inflation in recent years.” But, of course, that unprecedented run had to end at some point, and that time is now. Also, CEBR head of macroeconomics Nina Skero points out that this waning confidence in house prices might be a sign of falling consumer spending.
The Telegraph also reported on this crash in housing values, especially after Brexit. The OECD has noticed significant changes in housing prices in the country, most notably in London. However, OECD chief economist Catherine Mann believes that these price drops could be good for the UK, but only if the “adjustment is borne mainly by foreign investors.”
“What’s interesting in terms of the implications for the UK economy,” Mann states, “is who bears the burden—who bears the adjustment cost.” She explains that if a non-resident bears the adjustment cost, lower house values might be better for the UK.
This overt fear of house prices is due to the overarching implications of Brexit. These include, most notably, the possible economic fallout of leaving the EU, a divorce which many business leaders in the UK say “would deter investment, threaten jobs and put the economy at risk.” These assessments prove prophetic, with the public starting to feel the economic pinch created not necessarily by the actual split between the UK and the EU but by the friction and uncertainty it is causing as March 2019 nears. In addition, Bank of England governor Mark Carney Brexit declared that the UK economy had slowed down significantly post-Brexit. The country is now officially among the worst-performing in the G7. This downturn is naturally causing much consternation and affects various sectors, including housing, which is highly dependent on economic variables.