24th October 2019
Property – The Brexit Effect
Whether you’re a staunch Remainer or an avid Brexit-eer, there’s no denying that the uncertainty around when the UK will leave the EU is causing property market jitters. We are speaking to clients every day who are unsure of what to do and are waiting on a decision. So we thought it might be a good time to examine the broader impacts of the Brexit Effect. From the experts’ point of view.
Property – Brexit Effect
The economic uncertainty caused by Brexit has undoubtedly affected the market, with house price growth slowing year-on-year. The number of sales has taken a dramatic dip in recent months. Rumours of a base rate cut before Christmas could also create further confusion for people weighing up whether to move house or re-mortgage. Looking at the market activity before and after the referendum result can give us some insights.
The No Deal Brexit effect
Accountancy firm KPMG predicts a price drop of around 6% in the case of a no-deal Brexit – best case scenario. Worst case scenario there could be price drops of up to 20%. Other sources state “probable” price falls of approximately 10%. The Bank of England governor himself states that one thing is sure – UK growth will be guaranteed to fall.
House Prices Since Brexit
Prices did stagnate for a while immediately post-referendum. This can be blamed, to a degree, on the usual seasonal patterns. With Brexit looming ever closer, house prices fell more sharply than expected after last Summer. The good news is that they did improve again over the later Summer months as time passed and nothing actually happened! However, it is becoming more and more apparent that overall the rate of growth in house prices has again slowed dramatically more recently. It is impossible to say with 100% accuracy, however, whether this is the Brexit effect or simply a long overdue market correction. On the plus side, this can only help First-Time Buyers, who have struggled to enter the housing market in more recent times.
What About Sellers?
We all know sellers are key to a prosperous property market. Houses are needed to buy after all. Industry statistics show clearly that it has been taking people longer to sell. Transactions have never taken as long to progress and stock is dwindling. There is far less choice for buyers than in the years immediately after the Recession. Vendors are holding out before deciding whether to sell or not. The question is; holding out for what exactly? We will try and explore post-Brexit implications in next week’s article. Watch this space.