Brexit supporters see house prices soar fastest

Is panic from Remainers holding the housing market back in some parts of the country?

Brexit and house prices

The areas that voted to leave the European Union have seen house prices rise faster than elsewhere in the UK since the referendum. Meanwhile, those areas delivering strong 'remain' votes have seen prices rise slower, and in Scotland they have even fallen.

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The figures, uncovered by the HomeOwners Alliance, are naturally affected by a number of different factors, but in part demonstrate the influence of confidence on house prices.

It found that the five regions that voted most strongly to leave the EU have all seen house prices rise more than 3% since the referendum in June 2016, with the East of England growing fastest - at 4.25%.

Top five 'leave' regions
West Midlands - voted 59.2% to leave - house prices rose 3.57%
East Midlands - voted 58.8% to leave - house prices rose 3.11%
North East - voted 58% to leave - house prices rose 3.34%
Yorkshire and Humber - 57.7% voted to leave - house prices rose 5.53%
East of England - 56.4% voted to leave - house prices rose 4.25%

Meanwhile, the three regions where the majority of people voted to remain have seen house prices perform far less strongly. In Scotland they are down 1.2%, in London they are up just 2.45% and in Northern Ireland they have risen 1.81%

Paula Higgins, Chief Executive of the HomeOwners Alliance said: "There is a clear pattern here; areas that voted more strongly to leave the EU have seen property prices grow faster over the past six months than areas that were pro-remain. Of course, house prices are dictated by a myriad of economic, political and social factors, but confidence – the all-important 'feel-good factor' – is vital. It seems that people in regions that voted to leave are now more optimistic about their future prospects, and that this impacting on the housing market. Conversely, areas that have fared less well, such as Northern Ireland, Scotland and London, may be less certain of their economic futures."

What's going on?

It's a neat little study, which would seem to indicate that it's the doom-mongers, spreading panic about Brexit, who are damaging property prices. This argument would seem to indicate that if we just get on with it and stop worrying about Brexit, the housing market will be flying in no time,

However, in reality these results actually reveal five things about the property market - not all of which can be blamed on 'Remoaners'.

1. Confidence matters
As Higgins says, the property market is affected by lots of things, and confidence is one of them. In areas where a reasonable majority of people voted to leave the EU, the result of the referendum will make them feel more confident about the future. In this environment, people are less likely to be worried about the future of the property market, so they won't haggle so hard, and prices will be more robust.

2. Certainty also matters
Aside from confidence among Brexiteers, what we are seeing in this study is the result of a massive injection of uncertainty in some areas. Scotland, for example, voted to remain in the EU, so there has been much debate about whether Scotland follows England into Brexit or tries for independence. Whether or not homebuyers want this to happen is irrelevant, the fact that they have no idea what's going to happen has introduced an unhealthy dose of uncertainty into the market, and acted as a drag on the housing market. Likewise London, as a European centre for financial services, and home to so many EU migrants, has also seen its property market stymied by uncertainty.

3. Affordability plays its part too
The slowdown of house price rises in London is partly an indication that prices rose so high within the capital that they became unaffordable for too many people. Prices in the Midlands and the North of the country don't face such affordability issues. It's why so many house builders have switched their focus to the Midlands: there is still room for house prices to increase in these areas without pricing ordinary working people out of the market. When monthly mortgage payments are lower than monthly rents, it will always prove a boon for the housing market.

4. This result actually has nothing to do with Brexit itself
It perhaps doesn't go without saying that Brexit hasn't actually happened yet. The HomeOwners Alliance is arguing that prices depend partly on confidence - which is linked to Brexit.

What actually happens to the market when the UK leaves the EU is another matter entirely. There are those who believe there will be a recession, panic sellers, and a house price crash. Likewise there are those who think the economy will boom - and house prices will rise along with it. Clearly while Brexit sentiment is currently playing a part in the property market - it's a drop in the ocean compared to what Brexit itself will do.

5. London may be more significant than we think
In 1989, at the beginning of the crash, when house prices were already falling in London, other parts of the country continued to see price rises. You can argue over why some areas are growing faster than others outside the capital but typically London prices rise first, they rise furthest, and then they start to fall first. What we are seeing now may be a shadow of something more sinister to come - we will just have to wait and see.

But what do you think? Do you think this is just a Brexit blip, and a bit of British backbone will see us through? Let us know in the comments.

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