The property market
Unless you have been in hiding for the last six months or so, you will know that the UK goes to the polls next week to vote on whether to stay in the EU. The resulting uncertainty is affecting financial markets, particularly the housing market. Many national newspapers, financial websites and mortgage providers are reporting that the housing market has stagnated or slowed, with people sitting tight and waiting to see the result next week. Figures from the UK Treasury are suggesting that property prices could fall by 8% as a result of an EU exit and could rise by at least 10% if we remain.
This could be considered to be guess work, as it is obvious that the referendum is beset by uncertainty. If the UK leaves, it will be the first country to do so; therefore, there is no precedent to follow. It may take two or more years to unravel from the EU. With no firm answers on how Brexit would affect the country’s trade arrangements, it would be a step into the unknown.
Aside from the referendum, there are the usual conflicting opinions on the housing market. How does this affect the public? At the very least, we will know by the end of the month whether we are staying or going; however, for the property market and people trying to get onto the property ladder, further price increases are likely to make buying your own home even harder in the future.
The people least benefitting at the moment are the young; in fact, insurance company Aviva released a report last month predicting that nearly four million people between the ages of 21 and 34 could still be living at home by 2025 due to the increasingly high property prices. Buying a property is becoming less and less affordable, with property prices rising at a much faster rate than salaries. As recently as 1987, house prices were on average three times the amount of the average salary; now, this figure is closer to five or six times the amount.
This also affects the rental market. The Office for National Statistics also published a report this month showing that rental prices have increased by an average of 2.6% since last April. A report from rental agency Countrywide found that single people under the age of 29 who are renting a one-bedroom property are forking out 48% of their salary on rent. In London this figure goes up to 57%.
By the end of the month, at least we will know whether we are staying or going!
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