Brexit could make it cheaper for first-time buyers

19 September 2016

Almost one in three people in the UK believes the vote to leave in the EU referendum has negatively affected the housing market, a study by financial adviser network Unbiased has revealed.

The report, ‘Buying a Home in Brexit Britain’, says that first-time buyers have been particularly hard hit by the Brexit result. Just one in ten adults who don’t own a home had any plans to buy one in the next year.

More than one in three (36%) of those who took part in Unbiased’s survey lives in rented accommodation, with houses outnumbering flats. Only 16% of those renting have any plans to buy in the next 12 months.


But it’s not all bad news: the report also found an imbalance in the market, with those buying their first home slightly outnumbered by those planning to move to a bigger home in the coming year – and upsizers themselves are outnumbered by those planning to downsize. This imbalance could lead to a bottleneck in the market, bringing house prices down.

Improve rather than move

With more than four in five (84%) homeowners planning to stay in their current homes, home improvements have become more popular.  Just over one in 10 (11%) of homeowners are planning to build an extension, as compared with just 8% who plan to move to a bigger property.

The report also found that low interest rates have led to homeowners to think about remortgaging. One in five (21%) are planning to apply for a new mortgage, while a further 16% would like to, but can’t do so under the terms of their current mortgage. A further 13% are uncertain if they are able to remortgage.

Commenting on the report, Karen Barrett, chief executive of Unbiased, says: “First-time buyers have had it tough for some time. Many will have welcomed predictions that the Brexit vote would depress growth in house prices – but it may not be as simple as that. There are signs of increased caution higher up the housing ladder, which may slow the market’s movement even as it (perhaps) lowers prices.

“Markets tend to flow best during moods of optimism and certainty, both of which may be lacking at this time. When in doubt, homeowners tend to stay put and extend their properties instead – which is no use to the first-time buyer.”


Transactions up

Haart estate agency has a more positive spin on the post-Brexit market, suggesting that first-time buyers are benefiting from lower prices now. It says that as house prices in the UK went up by 2.9% in August, with an average price of £228,831, first-time buyers can enjoy cheaper house prices, deposits and mortgages.

The agent also reports that transactions have gone up by 5.6% in the UK.

Paul Smith, chief executive of Haart, says: “This month sees a property market that is still suffering from the Brexit blues. House prices are down, but are not out – as we near the bottom of the post-Brexit dip, with interest rate falls likely to help pick things back up again in the second half of the year.

“It is positive to see that transactions are still up for the second month in a row, so there is still plenty of activity in the market. We are also seeing a more positive picture for first-time buyers, as mortgage rates decrease, along with deposit and purchase prices, making it a good time to buy.”

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