PwC predicts 'no major crash' for property post-Brexit

PwC predicts 'no major crash' for property post-Brexit [Photo: Evgeny Gromov/iStock]

In the months after the referendum vote, it is inevitable that the property market will see a slowing down when compared to the tremendous health and strength it has displayed in the last few years. However, the predicted major crash that some expected to see will not become a reality, according to PwC experts. 

The underlying health of the market and its position in the market since the last economic crash in 2008 means that it should be able to weather the short-term storm and come out of the other side with a view to growing once again. 

House price growth in recent years has been red hot, but PwC predicts in its latest report that the rate of growth in the next few years will go the same way as the economy, where we see shrinking rises, but do not actually dip into recession. 

In 2016, PwC said, house price growth will slow markedly, following on from an initial slowdown in the months before the referendum, leaving the year with a three per cent rise across the nation, which is far slower than the double-digit growth we have seen in recent years. 

This downturn is likely to continue through 2017 as well, with the report predicting that prices will climb by just one per cent next year as the market continues to react to the Brexit vote. However, it is after this that the strength of property will show once more. 

After 18 months of a dip in rises, PwC said that house price rises should return to four per cent in 2018 as supply and demand issues once more push prices higher, while growth will then settle into a long-term average of five to six per cent as the property market once again shows the strong characteristics it has leaned on in the last seven years. 

"We think there are four main reasons why the Brexit vote will lead to a slowdown in the housing market in the short term: the deterrence of foreign investment, uncertainty regarding the future of EU nationals living in the UK, a reduction in consumer confidence and turbulence in the banking sector," said Richard Snook, senior economist at PwC.

"While these factors will weigh heavily on the market in the short term, we expect a gradual recovery from 2018 onwards as market fundamentals reassert themselves," he added.