Tepilo discusses a report revealing that the regions that voted most strongly for Brexit have also seen the strongest price growth since the referendum.
New research has revealed that the areas that voted most strongly to leave the European Union last June have also witnessed the fastest property price rises since.
The data, released by the Office for National Statistics (ONS) and analysed by the HomeOwners Alliance, shows that property values were most resilient in Brexit-voting regions of the UK. By contrast, price growth in areas that voted heavily to Remain – in particular Scotland – was more sluggish in the six months after Brexit.
The ONS figures allow, for the first time, an analysis of a full six months of post-Brexit property price data. By comparing changes in property values with the results of the referendum – and how the various regions voted – the HomeOwners Alliance revealed some clear and interesting patterns, suggesting there could be a ‘Brexit effect’ when it comes to the performance of house prices.
The top five ‘Leave’ regions were the West Midlands (59.2%), the East Midlands (58.8%), the North East (58%), Yorkshire & Humber (57.7%) and the East of England (56.4%). Since June 2016 all of these regions have seen prices rise by more than 3%. In the case of the East of England, home to some of the towns which voted most heavily to leave, including Boston and Peterborough, property prices rose by 4.25%.
Overall, only three UK regions backed Remain – London, Scotland and Northern Ireland – and all have witnessed slower growth or price falls since June. In Scotland, which voted overwhelmingly to remain in the EU (62.1%), house prices fell by 1.2% in the six months after Brexit.
London was the second most pro-Remain region, with 60% backing a vote to stay, but house prices in the capital have seen slower growth since, up by only 2.45%.
In Northern Ireland, which voted by a margin of 55.8% to Remain, house prices only grew by 1.8% since June 2016.
Although a clear pattern between areas that voted more strongly to leave and rising house prices was identified, it’s not totally clear why this is the case. House price rises and falls depend on a wide range of social, political and economic variables, so it’s impossible to nail down exactly why areas that voted strongly for leave are seeing better house price performance than areas that voted to remain.
It could be that confidence and the feel-good factor is driving the property price rises, with Brexit-heavy regions more optimistic about what a future outside the EU will bring. People in Northern Ireland, Scotland and London, less enamoured with the result, their futures and the economic prospects of the country, may be filtering these fears and concerns through to the property market, with a hesitant, unsure, ‘wait and see’ approach.
Prices across the country stayed resilient and robust in the aftermath of Brexit, despite dire warnings and talk of apocalyptic doom from some commentators and politicians. This, though, was never likely to be the case while the fundamentals of the housing market remained the same. Property prices weren’t going to fall off a cliff while demand continued to outstrip supply, with the supply/demand imbalance continuing to drive solid house price growth throughout the UK.
Demand is being kept high by low borrowing costs, high employment and the relatively strong performance of the UK economy since Brexit. It means buyers are now more confident about purchasing property, although the triggering of Article 50 could once again cause uncertainty among the buyer community.
Most industry experts have predicted steady house price growth in the year ahead, with the number of homes listed on the market remaining low, putting sellers in a strong bargaining position when it comes to negotiations.
Currently, it’s very much still a seller’s marketplace, but buyers will be encouraged by record low interest rates, various government schemes to increase the number of homes being built and the recent rises in the number of people getting onto the property ladder for the first time.
While the price growth in the affected regions isn’t purely down to the referendum, it seems the Brexit feel-good factor in these parts of the country that voted most heavily to leave may be playing a role. If nothing else, it’s a promising sign that these regions are starting to witness healthy price growth, redressing the considerable divide that we often see between north and south when it comes to property prices.
It will be interesting to see, over time, how these trends develop as Britain withdraws from the EU and the new post-Brexit landscape is formed.