Whatever looms on the economic horizon for the UK, it will inherently spell outright disaster for some and rich pickings for others. In various corners of Europe, political and economic unease is prompting the kinds of headlines that are making investors on a global basis more than a little nervous. But as far as the UK is concerned, Brexit really is the be-all and end-all of things for the time being.
The effect the furore has had on property marketing is no laughing matter. Depending on which side of the fence you’re on, of course.
A new report published by Nationwide found that the past month brought about yet another drop in UK house prices, this time by an average of 0.4%. This is not only the second consecutive month to bring about a fall in property values, but also the largest monthly fall in over five years. As it stands, the average price of a home in the UK now sits at £207,699.
The noted cutback in consumer spending combined with higher inflation and the prospect of Brexit are all having an impact on the housing market. There’s also been a rather dramatic fall in GDP, having fallen to 0.3%. Not the kind of thing that makes for positive reading on the campaign trail.
A two-sided story?
Given the fact that mortgage rates have been hovering around record lows for some time now, the fact that the property market is showing signs of weakness is all the more troubling. This, combined with the fact that unemployment is also at an impressive low, is another factor that should be boosting the strength of the housing market.
But it isn’t, which means for the time being, at least there are a lot of homeowners and investors being forced to watch their properties lose money like there’s no tomorrow. As already mentioned, bad news for some is good news for others.
Obvious, first-time buyers aren’t going to be too upset about the prospect of house prices falling at least a bit. But at the same time, neither are those looking to play the long game. As far as most analysts and economists are concerned, the current doom and gloom will prove to be temporary at best.
For example, if the upcoming general election brings about a strong and trusted new government, things are expected to perk up significantly. Likewise, if Brexit doesn’t turn out to be as disastrous as many expect, it could result in a rapid acceleration of property values. The slight caveat is that by this time, record-low mortgage rates will have no doubt been wiped off the map for good.
So it remains a bit of a catch-22 situation: As is always the case where investments are concerned, Rock-bottom mortgage rates coupled with falling property prices should represent a no-brainer. But given what’s occurred over the last 12 months alone, taking for granted anything that might happen over the next year or so really isn’t the smartest idea.