Buying a home is a major decision that people in the UK have to confront one time or the other. Most of the elderly population of the UK that own homes bought their houses when they were 35 years old or younger. This is back in the day when house prices were lower and incomes relatively higher. Time has seen property prices rise as compared to incomes. Now, only 44% of people under 35 years own their own homes. It can now take up to 20 years for a buyer to save enough money to buy a house.
Causes of Brexit
Property prices in the UK have been quite unstable since Brexit of June 2016. Price increases have fluctuated and are expected to remain volatile until Brexit is fully finalised. Property prices have generally fallen by 2%. The low property prices mean that buyers can have a better deal now than some time back. With the finalisation of Brexit approaching and given the fact that property prices are expected to rise again after Brexit, it may be wise to buy property now. The best part about buying houses now is that interest rates have fallen. A buyer will enjoy low-interest rates as well as low property prices.
Foreign investors have even a lot more to enjoy if they buy houses now. Brexit caused a decrease in the value of a pound. Foreign investors can take advantage of this by purchasing a house and selling it when the economy stabilises, and the value of the pound rises. Domestic transactions have fallen since Brexit. More properties are now in the market. It is easy for a foreigner to get a property to buy now than it was earlier.
Properties in London
The ease of buying a house depends on the location of the house. London real estate market is viewed by many commentators to be different from those of other parts of the UK. You can verify this position by analysing the wide margin of property prices between London and the rest of the UK. The average price for a residential property in London is £750,000 while that of other parts is £290,000. This is true even in properties with similar architecture. High property prices in London can be attributed to the abundance of opportunities in the city and the popularity of buy to let properties.
Approval criteria for buy to let properties are different from those of residential homes. A buyer of a buy to let property is only expected to pay over 25% or more of his achievable income. Mortgage for residential properties, on the other hand, is issued depending on buyers’ levels of income. This has been a disadvantage to low-income earners who make the largest population of the city. Many low-income earners in London have now been forced to rent rather than buy their own homes. As a result, people are now moving out of London to buy property in outer boroughs and other places where prices are still low.
So, if you were saving up for a new home, it does look like the prices are in your favour at least outside of London. However, the full effects of Brexit are yet to be seen, and it is unsure what changes it might bring. It depends on your expected future depletion of the housing market or capitalising on current drops in rates.