In May 2016, just weeks before the EU referendum vote, the serving Chancellor George Osborne warned that UK house prices could tumble by up to 18 per cent if the country voted in favour of Brexit.
His comments were indicative of the political and economic discourse that dominated the build-up to the referendum. Extreme, polarised views painted either very bright or very bleaks pictures for different segments of the economy, depending on the potential outcome.
Of course, as has become painstaking clear since the vote, it was impossible for anyone on 23 June 2016 to know exactly what they were voting for. The terms of any Brexit deal were unknown, and would remain so until December 2020.
Now, five years on from that momentous referendum, it is an opportune moment to reflect on how the property market has fared in the intervening period.
Bold Brexit predictions
George Osborne was certainly not alone in predicting hard times for the property market should the Leave party emerge victorious.
For instance, a report released by analysts at Deutsche Bank and credit rating agencies S&P and Fitch suggested that voting to leave the EU would instantly reduce the value of UK houses, while the National Association of Estate Agents claimed Brexit would reduce UK house prices by £2,300 and the average London house by £7,500.
With the benefits of hindsight, we know that such claims were inaccurate.
According to the Office for National Statistics, (ONS) the average UK house price in June 2016 was £212,887. By March 2021 (the most recent figures available) this number had risen by more than 20 per cent to reach £256,405.
However, it would be wholly unfair and, perhaps, facetious to make light of those who predicted a property market crash – there was such fear and uncertainty in the build-up to the referendum that bold predictions became commonplace, with one feeding into another.
Certainly, what did unfold was a long period of political and economic uncertainty. In the five years since the vote, the UK has had three different Prime Ministers, voted in two general elections, and experienced a drawn-out process of negotiating then implementing a formal Brexit process. The onset of the Covid-19 pandemic has then resulted in further turmoil.
Demand for bricks and mortar
To say that property prices have risen in spite of the prevailing sense of uncertainty over the past five years is not entirely true. Indeed, this uncertainty has itself fuelled homebuyer activity and property investment.
UK residential real estate is regarded as a safe asset among both domestic and international buyers; therefore, during periods of uncertainty and transition, such as the past five years since the EU referendum, investors are likely to gravitate towards bricks and mortar.
Official Land Registry data underpins this point. At the start of 1991, the average UK residential property value stood at £57,000, 20 years later this figure had more than quadrupled, exceeding £255,000.
