Brexit, Brexit, Brexit has been looming for the past 3 years, the uncertainty created by such a large economic change continues to pose questions over the domestic housing market. The main question on every homeowners’ lips is, “Will Brexit affect the housing market”?
According to the Bank of England
If there is a hard Brexit or limited package negotiated then house prices could see demand fall significantly and there is potential for falls of up to 30% from current price levels.
So far UK’s financial regulators have a preference for a Brexit agreement over a no-deal as this will bring about fewer risks in terms of market volatility. There have been contingency planning which has shown that with the continued stamp duty measures, low borrowing costs and a healthy employment environment will provide some resistance to a fall in demand for the housing market. It was noted that under both scenarios there is a propensity for market unpredictability.
Numerous industry leaders and economists have continued to voice their concern about the issues that may arise under a no-deal. Currently, the housing market is leading into the softer selling period of the year and this combined with a no-deal Brexit could cause a sentiment shift that may take years to regain. The economy was a flagging issue in the referendum on Brexit in 2016, with the remain group firmly in the belief that the positives regarding the UK economy and trade far outweigh the net contributions to the EU. Leaving the single market with no guidance around the flow of funds will create demand uncertainty from a seller’s perspective and potentially create some urgency around the sale of homes before Brexit. The Nationwide Building Society has reported that even in the last month house prices have started to fall, where they have dropped from £217,663 to £216,096.
Miles Shipside, Rightmove director and housing market analyst comments: “The housing market fundamentals remain largely sound in many parts of the country, but the current political climate means that the crucial ingredient of confidence has been impaired, and that is causing some potential buyers and sellers to hesitate”. The BBC reported on 28 April 2017 that property investment firm JLL data shows Asian investors accounted for 28% of the transactions in the UK property market in 2016, up from the 17% the year before — indicating that Brexit is not dissuading Asian property investors. The BBC also cited Chinese international property portal Juwai.com, which reported a 60% increase in inquiries into UK property in the prior 12 months. Property firm CBRE Group said in January 2017 that Brexit has increased risk in UK property markets by creating new uncertainties
If more homes are for sale in the coming months, economists have forecast that buyers will firmly have the upper hand when it comes to negotiations. This will force sellers who have to make an urgent sale meet buyers prices and sell fast at lower prices or seek alternative arrangements. The first-home buyers who have postponed their purchases over uncertainty in the political environment can take some solace in the expected rate cuts, stamp duty relief and a large supply of properties on estate agent’s books as sellers look to sell their home fast.
The newspaper, “South China Post” has reported that the interest in UK property has continued to soar to record levels based on a weaker Sterling due to Brexit complications. The interest and purchases of property have continued to be at record levels considering the political and economic uncertainty. The weaker currency environment is certainly providing some relief to domestic homeowners with property cash buyers popping up, but also in some ways posing more questions than answers.
Overall the questions remain and will do so until the entire Brexit process is negotiated and processed, there is a multitude of issues at play which will no doubt create volatility and uncertainty. Only in the coming weeks where a clear direction is revealed by the government and the EU, will the answers to the Brexit implications on the housing market be answered.
Would you like more information about how Brexit could affect the property market? Sell fast can provide advice, as we buy any home. Call 0800 368 7399 or request a call back to find out what your property may be worth.