As a nation, we are fixated on house prices. The last decade saw us all on a roller-coaster ride following the financial crisis and Brexit – while house prices boomed in the mid-2010s, they slowed down following the European Union referendum – and now questions hang over their stability in the wake of Brexit.
In the last ten years, we saw a decade of austerity and British house prices rose by 33.7 per cent on average. They are forecast to grow by approximately 15.3 per cent over the next five years.
London and the South East had the strongest results following the financial crisis, while the North, Midlands and regional cities are performing well this year.
The future for UK property prices
While rising house prices will boost homeowners on paper, it becomes harder for them to climb the housing ladder. Conversely, falling prices and lower house price inflation makes matters easier for first-time buyers.
Since October 2019, the average UK house price has been £232,944. The recent general election result could pave the way for growth in the housing market this coming spring. The average cost of a home is expected to rise by two per cent over 2020, with northern regions forecast to perform the best.
A base rate cut is looking probable following recent meetings held by the Monetary Policy Committee, which may have a knock-on effect on mortgage rates.
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The Brexit effect
The Brexit transition period takes us to the close of 2020 and the impact on house prices will not be clear until negotiations to reach a trade deal with the EU have been finalised. A survey by property-buying firm Good Move discovered that three-quarters of people overestimated the effect of Brexit on house prices thus far.
Should a trade deal with the EU not be agreed by the end of 2020, a no-deal Brexit is the default option. Many financial experts have voiced concerns about the possible consequences of this. In September, accountancy firm KPMG foretold that house prices could drop by up to 20 per cent if the worst happened, while Bank of England governor Mark Carney remarked in February 2019 that growth would slow should a no-deal Brexit occur.