Impact of Brexit on the housing market

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Impact of Brexit on the housing market
As the exit plan of the UK known as Brexit looms, the housing market has to a great
extent solidified up and different pieces of the UK have started to feel the impact. The exchanges
of top of the line business and modern houses have just achieved 10 years low despite the fact
that the market has just been damped by stamp obligation changes. Since the UK submission to
pull back from the EU, standard measures are pointing towards a generous ascent in
vulnerability. Regardless Brexit will be affected, there is significant vulnerability later on course
of action of exchange and connections. Vulnerability coming about because of Brexit will
possibly affect the house value development and lodging exchanges with suggestions for existing
and hopeful house proprietors. Although it will take time for the extent of these impacts to
become clear, in short-term, economic uncertainty is likely to affect the sentiment. In a world of
uncertainty, for instance in London, the demand is always determined by the health of the
international market and their entirety, something that is likely to fail (Djankov). However,
delegating the responsibility of the real estate management to financial intermediaries affects the
investment by adding extra costs thus reducing returns or profits (Ramiah, Huy Pham, and
Imad). Since the long haul impacts of Brexit isn't known, purchasers should continue with alert
as a great many people's home proprietorship will be exceptionally affected by their political
perspectives. Purchaser certainty will have a greater task to carry out than reasonableness in

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house value developments. This paper therefore explores the impact of Brexit on the UK market
in order to understand how uncertainty in the public opinion can influence the rise and fall of
equity in the property market. More specifically, we discuss whether uncertainty in buyers and
sellers can be a critical determinant of housing market performance or whether there are
additional critical variables that are not sufficiently recognized.
Financial value
One of the most frustrating aspects of the ongoing Brexit negotiation is uncertainty. It's
anything but an unexpected that buyer certainty has been thumped by the proceeded Brexit
vulnerability all the more so with respect to exchange. Therefore, action available has radically
fallen, especially after the referendum. Real estate investment trust shares were the first to fall
although it has now regained half of that loss (Baker, Scott, Bloom and Davis, 9). Then again,
there are financial specialists who are almost certain to go for broke so as to acquire benefit. This
is an unmistakable sign that the money related results of the leave vote are now being
experienced. Furthermore, there are higher possibilities that these impacts will increment once
the Article 50 of the Libson Treaty is actualized (Gudgin, et al). This is likewise almost certain to
cause material droop in the cost of euro-territory dangerous resources like bank values where the
fall of costs will be bothered by concerns with respect to the benefit of certain banks in the
district of euro. The slower development in the UK could likewise burden the fare development
in the euro locale to some degree. Advancements impelled by Brexit including the rising
vulnerability achieved by what is probably going to be a drawn-out time of withdrawal from EU
exchanges have the ability to harm the recuperation in the European Union (Halikiopoulou,
Daphne, and Vlandas). While vulnerability is relied upon to blur away at last, future changes in

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the political and financial connections among UK and Eu part states may enduringly affect the
medium to durable monetary viewpoint.
Interest rates
As it stands, London property market is heavily reliant on foreign investors which is one
of the main reasons why the capital in consistently outgrowing the rest of the nation. In fact, the
average London property is now more double than the national average. However, one of the key
concerns for the buyers of housing property is that, if the interest rates return to the pre-2008
levels or even higher, the housing prices could be in for a significant downfall. It is important to
note that since the Brexit vote, interest levels have been in stark as compared to the pre-recession
interest rates. If the UK leaves the EU with no deal, then a more significant rate hike could be
experienced. This could have a detrimental effect for the people who are currently paying
mortgages. The reason for this is that most variable mortgage deals are linked to the official
Bank of England’s (BOE) base rate (Dirk, Kiesel, and Kolaric). Although the rates on offer do
not always mirror the BOE rates like-for-like, they most certainly move up or down in the same
direction. For instance, people who took mortgage after March 2009, the interest charged on
their monthly repayments were likely to be ultra-competitive, however, if the rates experience a
sudden upward hike, their monthly repayments will ultimately follow suit. This can often result
into a situation whereby home owners are not financially prepared for an increase in monthly
repayments and can consequently result into issues regarding affordability. A hike in interest
rates can also be costly for the landlords who are in receipt of a mortgage on a buy-to-let basis
(Begg, Iain). This is due to the fact that most by-to-let arrangements are based on an interest-only
agreement, rather than a repayment mortgage. This means that landlords take full advantage of
the low BOE rates by only paying the interest off rather than the value of the actual mortgage