The recent effect of Brexit on U.K. real estate has been dramatic in some regards. While Brexit has the potential to send United Kingdom real estate markets reeling, the markets already show evidence of investors and home buyers taking a wait-and-see approach. After something of a brief stagnation following the results of the Referendum to leave the European Union in 2016, house prices in 2018 had found themselves reaching a much greater post-summer low than would usually be expected and they have only continued in a downward trajectory since.
Mark Carney, Governor of the Bank of England, has predicted that leaving the European Union without a deal in place could see house prices fall by as much as a third and that a significant decrease in growth would be all but guaranteed in the case of a no-deal Brexit. In contrast to the decrease in growth seen in the rest of the United Kingdom, Scotland has now become the first country within the union to see an actual year on year decline. When compared to statistics from the same month a year prior in 2018, house prices have been found to have fallen by 0.15%.
While England is not in decline as Scotland is, it is still seeing a very weak rate of growth, at only 0.4%. Wales and Northern Ireland are faring relatively well in comparison, seeing a growth of 4.14% and 5.45% respectively. January of this year saw a rise in the time necessary for sellers to sell their homes. The average time has risen to an all time high of 77 days. This figure fell slightly in February and even more so in March, but this is still higher than ever before. This has been put down to a nervousness in the market with regards to buying a house in an environment of such uncertainty.
It isn’t just residential real estate affected by the Referendum; spending on commercial real estate in London, including warehouses, malls, and office space, dropped 40% during the first two months of 2019 thanks to a wait-and-see approach. As real estate transactions have declined in the U.K., money has poured into other capitals in Europe, many to record highs. Berlin office buildings are now significantly more expensive than offices in London.
Going forward, it has been suggested by some that this might be a good time to buy. Considering the situation, there could be a good deal or two to be found amidst all the uncertainty of the current post Brexit referendum environment. The only thing that can truly be for certain at this time, however, is that absolutely nothing is certain.