We’re seeing a mixed bag of Brexit’s effects on business – but when it comes to the housing market we can gladly announce plenty of positives to take comfort in.
While house prices have dropped slightly – from a peak of £232,797 in August 2018 to £229,000 in April 2019 – the number of transactions remained unaffected, according to the recent UK Property Statistics report.
In the grand scheme, a drop of £3k isn’t a big figure, especially if you’ve lived in your home for a long time. Still, a drop is drop and the public have plenty of questions about their investments. We look at some of the most common questions people have regarding Brexit and the housing market and provide our view on what the knock-on effects will be in any such scenario, highlighting the positive effects and putting your worries to rest.
Should I move this year?
Our parent company, Arun Estates, experienced a 1.1% increase in prices last year. This is good news, so if you’re planning on selling or buying a home this year, you shouldn’t let Brexit deter you.
A relatively high level of employment and attractive mortgage deals from big lenders is helping to stabilise the housing market. If you have any questions, pop into your local branch and we can chat through them, providing advice that’s tailored to your unique own set of circumstances.
At a glance, how has Brexit affected the housing market?
● Rightmove has reported that, in December 2018, it was taking properties an average of 70 days to go under offer, compared to 67 at the same time in 2017 which they’ve attributed to buyer unease over Brexit. 3 days is the length of a Bank Holiday weekend if you think of it like that and the market is still moving. Just a tad slower.
● Sale prices dropped by 1.5% in the UK last year but…
● According to LonRes, the number of homes worth more than £2 million being put on the market reduced by 25% in the third quarter of 2018.
● However, the number of properties sold, remains consistent.
Will Brexit affect house prices?
It’s impossible to know what will happen to house prices after Brexit. Providing we get the right trade deals the housing market should be able to rebound to its previous highs from before the referendum. Aldo Sotgiu, Arun Estate’s Managing Director of Operations maintains that:
“As soon as we know what Brexit deal we are going to get, buyers will come back in greater numbers, tipping the balance of supply and demand back in the favour of sellers, and boosting the long-term trend toward rising prices.”
Prime Minister, Boris Johnson maintains that the UK will leave the EU on October 31st, deal or no deal.
What will a no-deal Brexit mean for the housing market?
If faced with a no-deal Brexit, the pound is likely to weaken which would result in higher inflation. Traditionally, the Bank of England would increase interest rates to help contain rising costs. Experts generally agree that in the event of an exit from the EU without a deal, the Bank of England will do all that it can to stimulate the economy. The good news for buyers is that they’ll be more likely to cut interest rates than to raise them..
Mortgage rates are still fairly low as lenders attempt to reinvigorate a slowing market by offering competitive mortgage deals. Mortgage Matters Direct report that a number of lenders are currently offering a five-year fix at less than 2%, with some even offering a 10-year fix at a slightly higher interest rate. In any case, it seems that this trend could continue in the face of a no-deal Brexit – this uncertainty shows that there are mortgage bargains to be had.
How will Brexit affect new homes?
The new build market is going strong, thanks to the Help to Buy extension. Yes the industry relies on skilled labour from abroad, but this is an opportunity to increase more jobs for existing citizens. Demand for homes is still high, regardless of whether they’re new or existing and banks will always provide a means to make money.
Watch Cubitt & West's inside view of Brexit and the housing market
For more advice about the housing market in 2019 and beyond, download our Biannual Report.