UK property prices have again frozen up as the leaders of the European Union are planning to use Article 50 extension in upcoming days. EU leaders are most likely to reject the short extension request of Theresa May because they all are in favor of suspension to keep the UK in EU for up to two years.

However, the final outcome is still completely unpredictable as of now and there is so much skepticism around when the UK will leave EU.

Consequently, this confusion has invoked prices fall in the UK housing rates.

In order to understand how Brexit will affect UK house prices. Let’s first get the idea of Brexit impact on property prices up till now.


Effect of Brexit on House Prices So Far

Due to the uncertainty over Brexit, at the beginning of 2019, house prices in the UK witnessed only 2.6% higher growth as compared to the first three months of 2018.

However, the growth is slightly above the recent economists’ poll conducted by Reuters, where a quarter growth of 2.3% was predicted. Nevertheless, house prices in the UK have been completely volatile in the past few months.

And as far as the “No Deal Brexit” is concerned, the governor of the Bank of England, Mark Carney, anticipated a significant fall of 35% in housing rates in a worst-case scenario. Moreover, in a no-deal Brexit condition, people would like to wait and watch the economic impact of the agreement.

Therefore, no-deal Brexit would likely cause a greater degree of hesitancy among potential property buyers.

The chances are very high that Theresa May will be forced into accepting a longer extension of Article 50 which would delay Britain’s departure from the EU until the end of 2019 or even extend up to 2020.

Russell Galley, managing director at Halifax, said that the annual house prices growth of 2% to 4% is expected by the end of 2019 which is slightly stronger than 2018 but not very much in modern comparison.

In either case, it is not very likely that the UK’s departure from the EU will spark a market crash because the housing market is not as volatile as the stock market.

Having said that, it is quite possible that a ‘Soft Brexit’ or a ‘Hard Brexit’ will definitely slow down the housing market but in spite of this Brexit uncertainty, low unemployment and stable mortgage rates will sustain the housing demand in the UK.


What about Mortgages?

Experts say that it might get harder to get a mortgage in a “Hard Brexit” deal scenario as interest rates are likely to be cut and perhaps, the bank may be less willing to lend. Industry-wise data shows a remarkable fall of 40% in the number of approved mortgages.

Moreover, we are moving into a period of uncertainty and as mortgage rates are terribly low right now, people want to fix into a low rate to give themselves security.

However, jumping into a fixed rate without considering the alternative is not wise as of now. Therefore, Life Tenancy Investments can be a smart choice in such an unpredictable market scenario.

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