UK’s housing sector expected to weather the storm of Brexit process
With prime minister Theresa May having announced recently that the UK will start official proceedings for leaving the European Union (EU) by March next year at the latest, the outlook for thriving markets such as property are now slightly clearer, with experts able to predict what might happen during what is likely to be a turbulent period.
In property, which has been undoubtedly one of the strongest industries in the UK for some time, there are likely to be some tough times, but this will mostly be down to short-term sentiment issues, and the underlying health that has seen property remain strong since the referendum in June, should help the sector pull through relatively unscathed.
According to JLL, the biggest challenge that property across the UK will face will be the short-term drop in demand when Article 50 is triggered early next year. However, throughout the process of leaving the EU, which will last two years, this demand will start to pick up for stock once again, and by the time 2020 comes, the UK will be heading into a period of real growth once again.
“Demand will be undermined in the short term by uncertainty and a more subdued economy while supply issues will exacerbate, lending support to prices. The perennial issue for the housing industry remains supply and we are pleased that there seems to be fresh impetus in this regard,” said the report from JLL.
It went on to say, however, that no matter how strong the property market is at present, its potential for growth after the exit period has been completed will be dictated by whether policy set by the government looks simply at short-term supply shortfalls or long-term solutions.
Showing how the market will start to steadily recover after the moves to exit the EU, JLL said that it will grow in value by 0.5 per cent in 2017, then by one per cent in 2018. In 2019 the market will expand by two per cent, followed by four and five per cent improvements in 2020 and 2021 respectively, as the market trends towards steadily more impressive growth.
“We expect the UK housing market to be more subdued over the next two to three years. However, it will remain reasonably active with little chance of meaningful price corrections. Assuming Brexit negotiations are not too detrimental, we could see a rebound in London housing markets in 2020, before the rest of the country follows,” said Neil Chegwidden, head of JLL residential research.
News provided by Rentman Software