In the lead up to Brexit, the now former Chancellor, George Osborne, warned that if the country decided to leave the European Union house prices would collapse and Britain would spiral even further into a housing crisis. Citing ‘Treasury analysis’, Osborne claimed that voting for Brexit would swipe a fifth off house prices overnight.
But the British housing market hasn’t crumbled just yet: the few storm clouds are focused above London, with the rest of the country still growing – in the government’s latest House Price Index, nationwide properties actually rose by 8.3% in the month after Brexit.
As Knight Frank’s Head of Country House Department, Rupert Sweeting, explains: ‘The good news – whichever way one voted – is that the result has caused an increase in activity in the months of July, August and September.’ Sweeting notes that there has been ‘an increase in international investors looking to take advantage of the favourable exchange rates,’ particularly in the countryside where you get significantly more for your investment. Thanks to the devalued post-Brexit pound, some foreign investors can actually get property 10% cheaper.
‘This time last year,’ Sweeting adds, ‘the country house market was absorbing the effects of the rise to 12% in stamp duty on property valued above £1.5m.’ The changes to stamp duty brought into effect in the 2015 autumn budget created a demand slump in the market, particularly in the countryside where homes were suddenly pushed into higher tax brackets.
By the time this fall in demand dissipated, Osborne announced a 3% tax on second properties, causing ‘a huge surge of activity as people sought to conclude deals before it came into effect on 1st April 2016.’ Then the market slowed yet again as people sat on their hands, waiting for the EU referendum result to be announced.
‘Since the result, the country market activity is returning to normal and we are expecting the Autumn market to be stronger than the summer market.’ Normally, adds Sweeting, it’s the other way around.
But, with a recent Office of National Statistics report suggesting that there could be a ‘dramatic increase’ in rural migration by 2025, one certainty is that the countryside market will only grow over the next few years.