In 2016, Britain held a referendum to withdraw from the European Union.  Brexit defines the outcome of the referendum, ‘Britain to exit’. Against all voices and tension, the government schedules the withdrawal for March 29th, 2019. Brexit may dramatically alter the course of British economy, but the UK property market has secured a steady rise over the past year.

Before the referendum of Brexit in 2016, the country was exhibiting a slow growth and experiencing a drop in its living standards and losing vital workers to some of its industries as immigration rate declines. The GDP in UK in 2017 was a low 1.8% compared to the average 2.5% in the EU. A more severe prediction is that the country may fall into a recession during the 2-year transition period after 2019.

On the contrary, since the Brexit referendum, the property market continues to rise, even though it has slowed from 6.5% in 2014 to 2.7% in 2017. The weak pound and the decline, however, have made the property market extremely attractive to foreign investors.

The property market of London has suffered from a particularly marked slowdown. The once skyrocketing growth in London is expected to fall 0.5% in 2018 versus the country’s outskirts, where the housing prices in the next top five UK cities will continue to rise in the next 4 years. The United Kingdom is no longer reliant on the property market of London when other smaller cities are expanding their regional businesses hubs under the Northern Powerhouse Initiative. Cities including Birmingham, Manchester, Leicester and Liverpool have a market growing by more than 6% on average annually. A recent Reuters’s poll of UK housing market concluded that the decade-long boom in the UK property market will soon end, but prices will grow at an average 2% nationwide in 2018.

The UK’s future is under murky waters, but numerous research suggest Brexit would result in little impact onto the nation’s economy. Two separate reports were released last week. The first was released by the Mayor of London, a research from analysis of historical data by Cambridge Econometrics. The report predicted a Gross Value Added (GVA) reduction of 0.5%, a low GVA decline which will have little to no impact on the overall economy in the long run. Moreover, the study predicts an unchanged or an even higher living standard, depending on the negotiation terms that the government will undergo with the EU.

The other report, by the Government of Scotland, largely exaggerated the impact of Brexit, focuses mainly on Scotland’s trade businesses as a dependent on UK trades with the EU. “The report focuses on the relationship between trades and productivity only, based on empirical studies, which emerge from developing countries. If using evidence from rich countries like the UK, there is little to no evidence of such link into the productivity of the economy,” said financial analysts on Briefings on Brexit.

During the 2-year transition period, as proposed by the government and the referendum, the baseline forecast is that the GDP by 2030 will be a 1.2% decrease, with an unemployment rate of 3%. However, the predicted GDP per capita will increase by 0.5%: a slow but still a rising number. For the property market, economists predict that it will likely drop to a low 1.5% growth annually beginning in 2018 to 2020 but will again soar to a 5-6% growth by 2021.

Source: The Week, BBC News, CNBC, Briefings for Brexit, Cebrs