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Brexit & the property market

Date Published 01 March 2019

With the political climate being so unsure with Brexit on the horizon there is a lot of concern around house prices dropping. In September 2018, Bank of England governor Mark Carney warned that leaving the EU without a deal could send house prices falling by a third & UK growth would be ‘guaranteed' to fall in the event of a no-deal Brexit.
House prices did stall for a while following 2016's referendum but this could also have been down to the usual pattern of prices fluctuating over spring & summer which we also saw in 2017. With Brexit looming closer, house prices suffered a larger post summer dip than usual in 2018, dropping from a peak of £232,797 in August to £230,630 in November. The latest ONS House Price Index shows that they crept up slightly in December, meaning that the current average UK house price is now £230,776.
The rate of house price growth plummeted everywhere in the UK except for Scotland. It has continued to decrease in England ever since & Scotland also dipped down in December. However, there was significant growth in Wales & Northern Ireland. It's worth bearing in mind that even if the rate of growth has decreased, house prices themselves haven't – and many argue that the slowdown in England is simply a long-overdue market correction.
Brexit is undoubtably causing uncertainty in the housing market which in turn affects sentiment & decision making. Both buyers & sellers are putting their plans on hold. Once the details are clearer, we'll have a degree of certainty which may trigger a flurry of activity. The issues troubling most landlords are the status of non-UK & in particular EU citizens, given their responsibilities to police the Governments Right to Rent policy, as well as the overall impact that Brexit will have on the stability of the housing market. It's still too early to predict what impact Brexit will have on property values. A weakening of the appeal of UK investment could drive prices down or a lack of certainty could drive up interest in the relative stability of bricks & mortar.
Likewise, changes to immigration policy could reduce demand from those coming to the UK or drive up interest from those taking advantage of new arrangements with states outside EU. It is likely that landlords with established well-capitalised portfolios will fare reasonably well. However, those heavily reliant on finance may find uncertain conditions more troubling.
A few recommendations we can make during this uncertain time –
‘Don't just jump into a fixed rate'
Our political situation may be uncertain but it's important that buyers & homeowners don't panic or make rash decisions.
‘If you want to live there long term – buy now'
People are holding back in hopes that prices will fall but supply & demand are waning as people are refusing to move. This can limit the likelihood of decreasing house prices but it can also mean that few move as there's little choice on the market for would-be sellers. If you were to buy now – even if the value did drop- it would likely increase again by the time you came to sell (providing you stayed for 5 years).
Buy-to-let demand from landlords has already reduced so it's unlikely we'll see more falls this year. While tenant fees are being banned from June, rents are likely to fall due to a lack of stock, meaning that now isn't a bad time to be a landlord if you understand your objectives and whether the deal stacks up both now & in the long run.
As it stands nothing is clear in regards to Brexit, so trust your judgement & don't hold off on buying your dream home in the hopes that the price will drop. If you're looking for any more advice don't hesitate to get in touch. We're here to help you with all your property queries. Contact or call 0151 733 1879