# We need to talk about Brexit Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2016-12-08 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: UK Housing Market Uncertainty - What to Expect Next Meta Description: Explore how economic and political changes have impacted the UK housing market, leading to uncertainty and a slowdown in trading activity. Discover insights URL: https://financedigest.com/we-need-to-talk-about-brexithtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/img9819-322-1736844340024-compressed.jpg) By **Tal Orly,** CEO and founder of Cogress ![Tal Orly](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/bf14193-200x300-1736844339973-compressed.jpg) Tal Orly The UK housing market has been bruised by both economic and political changes over the past 12 months.The result has been an overwhelming mood of uncertainty.  No one _really_ knows what will happen moving forward. Any commentators offering their opinion are doing nothing more than theorising. I have spoken to dozens of agents, researchers, journalists, lenders, financiers, marketing experts, developers, architects and people on the [street and each has a different take on the market](https://www.financedigest.com/wall-street-bounces-oil-slides-as-markets-mull-murky-economic-picture.html "Wall Street bounces, oil slides as markets mull murky economic picture"). The media has conflicting reports, with [prices up one day and the market](https://www.financedigest.com/markets-pricing-some-geopolitics-but-risk-premia-can-grow-further-goldman.html "Markets pricing some geopolitics, but risk premia can grow further -Goldman") on the verge of collapse the next. It is becoming increasingly apparent that we are entering the unknown. Uncertainty does not have to be synonymous with negativity, but it does slow down [trading activity](https://www.financedigest.com/ethereum-software-upgrade-activated-ether-reverses-losses-trades-up.html "Ethereum software upgrade activated; ether reverses losses, trades up"). For example, a vendor may one day decide to sell their property as they believe that the timing and the pricing is right, but the next day an outside [influence disrupts the long-term trajectory of the market](https://www.financedigest.com/how-to-grow-your-brand-with-influencer-marketing.html "How to grow your brand with influencer marketing"). The vendor is now not sure whether or not the [timing and pricing](https://www.financedigest.com/rising-oil-prices-buy-iran-time-in-nuclear-talks-officials-say.html "Rising oil prices buy Iran time in nuclear talks, officials say") is right after all. So what do they do? Typically, the answer is nothing. They decide to hold tight, wait for the dust to settle and [see what the result is 6-12 months](https://www.financedigest.com/china-equities-weigh-as-em-sees-another-month-of-outflows-iif.html "China, equities weigh as EM sees another month of outflows – IIF") down the line. The knock-on effect of this ‘waiting’ [period is what causes the downturn in the market](https://www.financedigest.com/atomic-spectroscopy-market-market-is-expected-to-show-the-highest-growth-rate-during-the-forecast-period-2022-to-2025.html "Atomic Spectroscopy Market market is expected to show the highest growth rate during the forecast period 2022 to 2025"). [House prices](https://www.financedigest.com/uk-house-prices-show-unexpected-strength-in-october-nationwide.html "UK house prices show unexpected strength in October: Nationwide") may not fall; in fact, they may even continue to rise.However what’s more relevant is that the transaction levels that are suffering. 100 houses may sell in a month at a price of 5% above the previous year, but if 200 houses sold the previous year in the same month, then the flow of trade has dramatically dipped, this slowdown on trade [creates a drop-off in the market](https://www.financedigest.com/could-the-surging-build-to-rent-market-create-emerging-opportunities-for-investors.html "Could the surging build-to-rent market create emerging opportunities for investors?"). After a while the market reaches a [breaking point and prices](https://www.financedigest.com/gas-price-surge-pushes-europes-ceramics-industry-to-breaking-point.html "Gas price surge pushes Europe’s ceramics industry to breaking point") start to decrease. In a recent Knight Frank report, it showed that the [price drop](https://www.financedigest.com/oil-prices-head-for-fourth-weekly-drop-as-demand-fears-weigh.html "Oil prices head for fourth weekly drop as demand fears weigh") has become most prominent in prime central London. In fact, it showed a direct correlation between the initial price and its later drop. [Annual price change for £1m to £2m properties](https://www.financedigest.com/british-property-portal-rightmove-hikes-dividend-after-annual-profit-jump.html "British property portal Rightmove hikes dividend after annual profit jump") was -1.4%, for £2m to £5m it was -2.3%, for£5m to £10m it was -3.75% and for £10m+ it was -3%. Interestingly, the price of £10m+ properties has been less affected than the £5m to £10m. This is because the super-wealthy, in particular super-wealthy foreign buyers, have been more immune to change. Moving forward, developers and investors have had to take stock of their [position in the market and look for alternative locations and opportunities](https://www.financedigest.com/infant-positioning-aids-market-application-trends-growth-opportunities-and-worldwide-forecast-to-2027.html "Infant Positioning Aids Market Application, Trends, Growth, Opportunities and Worldwide Forecast to 2027"). Knight Frank’s report shows that the sub-£1m [market has witnessed a 0.6% increase in prices](https://www.financedigest.com/leno-bags-market-witness-a-spike-in-growth-pace-recent-improvements-in-pricing-models-fmi.html "Leno Bags Market Witness a Spike in Growth Pace Recent Improvements in Pricing Models: FMI") from last year. More importantly, the trade levels at this level were less affected. Not only is there a significantly larger percentage of buyers at this level, but also the stamp duty levels in that bracket are not impacted. Stamp duty is actually cheaper in the sub-£1m [market than it was a year](https://www.financedigest.com/child-resistant-single-dose-pouches-market-one-the-most-booming-industry-in-upcoming-years-due-to-global-demand-by-2031.html "Child Resistant Single Dose Pouches Market | One the Most Booming Industry in Upcoming Years Due to Global Demand by 2031") ago. As a result, this [level of the market](https://www.financedigest.com/electronic-board-level-underfill-and-encapsulation-material-market-to-expand-at-a-cagr-of-5-5-by-during-the-forecast-period-of-2020-2030.html "Electronic Board Level Underfill And Encapsulation Material Market to expand at a CAGR of 5.5% by during the forecast period of 2020-2030") has become the new hotspot. [Banks are more willing to lend on the sub-£1m market](https://www.financedigest.com/the-stem-cell-banking-market-to-keep-up-the-digitized-momentum.html "The Stem Cell Banking Market to keep up the digitized momentum"), valuations are more likely to hold up and most of all, sales trade is much more buoyant. In all categories the [risk is significantly lower](https://www.financedigest.com/evergrande-jitters-pull-risk-currencies-lower-dollar-gains-on-safety-bid.html "Evergrande jitters pull risk currencies lower, dollar gains on safety bid"). This all comes down to capital value. The buyer on the [street doesn’t look at price](https://www.financedigest.com/wall-street-set-to-open-higher-oil-prices-extend-losses.html "Wall Street set to open higher, oil prices extend losses") per square foot, they look at the capital value. A spacious 1,200 sqft two bedroom flat in [central London in 2013-14 could have sold for £1.2m at a rate](https://www.financedigest.com/central-banks-ease-off-on-rate-hike-push-in-october.html "Central banks ease off on rate hike push in October") of £1,000/sqft. However, the [current market](https://www.financedigest.com/global-transcutaneous-monitors-market-current-and-future-demand-growth-opportunities-2029.html "Global Transcutaneous Monitors Market Current and Future Demand, Growth Opportunities 2029") won’t pay that. Therefore developers aren’t building 1,200 two-bedroom flats any more. They are building smaller flats. They [need to get the capital value down and sell](https://www.financedigest.com/soccer-deep-pockets-needed-to-persuade-glazers-to-sell-united.html "Soccer – Deep pockets needed to persuade Glazers to sell United") a smaller 900sqft two bedroom flat for £900k. The price per square foot [holds](https://www.financedigest.com/oil-prices-hold-firm-amid-hopes-for-economic-growth.html "Oil prices hold firm amid hopes for economic growth") up at this price bracket and we are seeing this across the whole capital. The focus is on: smaller units, [higher volume](https://www.financedigest.com/ds-smith-says-cardboard-box-volumes-strong-flags-higher-costs.html "DS Smith says cardboard box volumes strong; flags higher costs") and lower capital value. The result of this is the need for expertise. [Investors need](https://www.financedigest.com/exclusive-new-investor-backs-bt-says-fibre-jv-may-not-be-needed-source.html "Exclusive-New investor backs BT, says fibre JV may not be needed – source") to have confidence in their investments. This confidence can only come from a [deep understanding of the foundations of the property industry](https://www.financedigest.com/vibratory-feeder-machine-market-insights-deep-analysis-of-key-vendor-in-the-industry-2019-2029.html "Vibratory Feeder Machine Market Insights, Deep Analysis of Key Vendor in the Industry 2019 – 2029"). While some projects and deals may be shaken by the Brexit shockwaves, those whose knowledge has deep roots in the [market will continue to find intelligent opportunities](https://www.financedigest.com/uv-disinfection-equipment-market-opportunities-demand-and-revenue-forecast-2025-tmr-study.html "UV Disinfection Equipment Market Opportunities, Demand and Revenue Forecast 2025 – TMR Study"). --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---