How Brexit is already killing the housing market
How can Brexit be killing the housing market? The Brexit negotiations have only just begun, and the UK is still firmly a member of the European Union, so arguably it can't possibly be having any meaningful impact on house sales and prices. Unfortunately you can argue all you like, but the facts are staring us in the face - Brexit has driven a knife through the heart of the property market.
SEE ALSO: What's the difference between a hard Brexit and a soft Brexit?
See also: Cash-strapped households reluctant to splash out as living costs rise
Sales have stalled
If there's one thing house buyers and sellers hate more than anything else (including pebble-dashing), it's uncertainty, and the Brexit vote delivered this overnight. When we lost faith in the future, we lost the confidence to buy and sell, and in the second half of 2016, sales were 9% down on the same period a year earlier.
Elliot Castle, CEO of We Buy any Home, says: "We have been told by the government not to expect smooth sailing, and to be prepared for difficult times ahead, and consequently we have witnessed potential home buyers and sellers halting big financial decisions in favour of waiting to see how the economy develops over the next 2-3 years. This decision has been particularly troublesome for the housing marketing, as there are fewer potential buyers on the market, and even fewer properties for them to buy."
The London bubble has deflated
London has been the engine of house price growth for as long as we can remember. It has been a major destination for international buyers, so prices have been shooting through the roof. This has forced less well-heeled buyers out into the South East and the Midlands - and to cities further afield, where they push up the prices in turn.
The Brexit vote has dramatically dampened international enthusiasm for London property. Buyers may be able to get a better deal because of the collapse of the pound, but this isn't enough to convince them that investing in London property is safe. There's no guarantee that either prices or the pound will recover in a hurry - and they don't want to be stuck with a London home.
As a result, we have seen some eye-watering falls in prime central London - with a knock-on effect rippling out through the capital and beyond. Nationwide, property prices rose in June, but this came on the back of three months of falls, and Robert Gardner, Nationwide's Chief Economist warned that this was no guarantee that price drops were over.
Saving for a deposit is a nightmare
Inflation and the rising cost of living means that saving for anything is getting harder - and according to the ONS, the household savings ration has fallen to an all-time low of 1.7%. Castle highlights: "For the rental generation, the increase in the cost of living and rental prices against stagnant wages, means people are finding it harder to save the money needed for a deposit." It doesn't help that in the vast majority of savings accounts, the growth in inflation means that savings are actually being eroded each month by inflation - so savers may well not see the point.
The good news
On the flip side, the Brexit vote has brought one positive thing to the market - the number of mortgages on the market has increased. Lenders have been cutting rates, and there have been some astounding deals on fixed rates for the last few weeks. For now, if you can afford a property and find a house for sale, this is a great time to get a mortgage.
However, even this good news may not last. We've already seen the collapse of the pound push up inflation, and there are signs that we could see this trend go far further in the months to come. The Bank of England is already discussing the possibility of raising interest rates to keep inflation under control, so the days of low interest rates on mortgages could be numbered.