Will house prices drop after Brexit?

Boris Johnson is set to hail the ‘dawn of a new era’ as Brexit finally happens tonight and the UK leaves the European Union.

The country is due to exit the bloc at 11pm and enter a ‘transition period’ during which many EU laws will still apply, ahead of the UK and EU beginning talks to decide its future relationship.

Naturally there are concerns about the impact and how life will change – and concerns have been raised over what the UK’s EU departure may mean for house prices.

Will Brexit have an impact and if so how will they be affected?

Will house prices drop after Brexit?

The uncertainty over Brexit has taken its toll on the housing market, with prices falling across London and in the south-east – and people holding off from buying or selling as a result, especially amid fears that we would leave without a deal.

However this has changed in the wake of the Conservatives winning the election in December, with a surge in buyer demand which has been dubbed the ‘Boris bounce’.

Mortgage approvals also rose in December 2019, with reported lending at around £22.2bn, bringing the annual total for the year to £265.8bn.

“It’s encouraging to see this uptick in mortgage approvals, particularly considering the scale of last year’s economic and political uncertainty, and the ongoing under-supply of available affordable properties,’ said Miles Robinson, Head of Mortgages at online mortgage broker Trussle.

‘Following last month’s election people may begin to start having more confidence in the mortgage market. This, coupled with the strong foundation of mortgage lending in 2019, could provide a very solid base for the housing market over the next year.

‘Mortgage deals are really competitive at the moment, and if the Bank of England cuts interest rates in the coming days – we could see even more would-be buyers choosing to act.’

Whether or not Brexit impacts house prices will remain to be seen – as little in the UK will change following the exit due to the transition period, during which EU rules and regulations still apply even though the UK is no longer a member state.

What happens next will likely depend on how the future relationship between the UK and the EU pans out, with talks on a trade deal set to begin in the weeks following our exit.

If the UK fails to strike a deal with the EU by the current end date of the transition period – which is 31 December 2020 – and the transition period is not extended – then the country would leave with no deal and revert to WTO rules on trade and security.

A scenario like that could potentially impact the likes of house prices and exchange rates – but we’ll just have to see what happens in the coming months as to whether that becomes a possibility.