Adam James, head of marketing for We Buy Any House
As the intricate web of Brexit and our departure from the EU continue to unravel, many are questioning ‘what’s next for the UK and its industry?’ – None more so than the property market.
But it’s not just property industry experts that are worried. First time buyers, investors, and landlords are all questioning whether now is a good time to move, sell, or purchase with such uncertainty looming.
The best indication of what will happen in the coming months is what has happened most recently. London’s housing market has begun to freeze up, the effects of which can be felt across the UK. Towards the end of 2018 we saw the market slow significantly, with many experts predicting a difficult 2019. A report conducted by the Royal Institute of Chartered Surveyors shows the housing market at its lowest level since 2016. Another study from the Centre for Economics and Business Research found that properties in cities and towns in the UK were left on the market for six days longer than they were in 2017.
Michael Patterson, CEO of We Buy Any House believes that the lack of parallels with Brexit indicate a rocky road ahead: ‘both domestic buyers and the significant interest fueled by overseas buyers would potentially dry up within a very short space of time whilst the market tries to readjust to a unknown position that has no previous parallels. We can expect significant confusion and history tells us that at times like these the property sector is the one that takes the biggest hit.’
The rental market is clearly being affected, too, with a recent report released from HomeLet showing that rents throughout the UK rose by 3.8% in February alone compared to last year.
All of this indicates that the property market in 2019 is expected to be stagnant as buyers and sellers decide to sit tight until the Brexit mist has cleared. But is there any light at the end of the tunnel?
Some experts seem to think so.
A resolution of Brexit negotiations could act as the catalyst for potential buyers and sellers to reenter the market.
The housing market has always been able to weather both economic and political change, but often struggles when faced with uncertainty. Many say that we must be cautious of catastrophizing a no-deal Brexit and the housing market. While it is likely going to have an impact, there are other factors at play that could work to mitigate any significant issues. Things like a drop in the value of sterling could mean a loosening of policy helping drive up housing demand quickly. It’s also worth remembering that buyers, providing they mitigate the risk, shouldn’t fear a house price crash. Purchasing now could mean a drop in value on a short term scale, but if you’re planning to live there, it’d be expected that the market will have recovered by the time you choose to sell again.
Others believe that landlords with portfolios will be able to steer a clear course through Brexit. The uncertainty around Brexit could drive down the appeal from outside investors, pushing prices down creating ample opportunity to continue to add to their portfolio. Any landlord reliant on finance may experience a more uncertain future, though.
Amadeus Wilson of SPF Private Clients: says: ‘It is important to consider your own circumstances. If you need to move for work, schooling, or because you need a bigger home or are downsizing, and find a property you wish to buy at a sensible price and can afford to do so, there seems little reason why you shouldn’t go ahead.’
The effects on the property market from Brexit may be widespread and much more nuanced than political and environmental shifts we’ve seen before. The lack of comparable data means that many operating in the industry are battening down the hatches preparing to hold out until the storm has passed. And that could be a while.