When the results of the 2016 referendum came in, the news sent shockwaves throughout the country – the housing market included. That was to be expected, as such a colossal development would surely have a profound impact on all areas of industry.
The immediate fear was that house prices would crash. However, nothing as dramatic has taken place yet. But as “exit day” – March 29 – draws ever nearer, some effects of Brexit are starting to become more apparent. Chief among them is the uncertainty that has crept into potential homebuyers.
This insecurity is yet another reason to look for cheap online estate agents if you’re selling a property – the UK is going through trying times, and you want all the help you can get. But this is a complex issue which needs to be observed from several perspectives.
As mentioned, Brexit is yet to have a drastic effect on the housing market. And it is impossible to predict with certainty when or if such an effect will take place. The reason for this is simple – we do not yet know what kind of a deal the UK will strike with the EU regarding the exit.
However, with each passing month following June 2016, the odds of an unfavourable (no-deal) arrangement became greater. Naturally, this has created a degree of fear. And the warning Mark Carney, the governor of the Bank of England, gave in September 2018 certainly did not help matters.
According to press sources, Carney advised the Cabinet during a special meeting that the outcome of a no-deal Brexit had the potential to be devastating, comparing it to the financial crash of 2008. Carney warned that unemployment rates could skyrocket while house prices plummeted. His prediction was that the prices could drop by as much as 35% over a three-year period.
Now, it is very important to point out that Carney’s remarks referred to the absolute worst-case scenario. And if we look at the UK on the whole, house prices are still not moving in the direction of a 35% drop. In fact, the prices have continued to increase. According to the latest data of the Office for National Statistics, the house prices in November of 2018 were 2.8% higher than they were 12 months back.
However, this does not mean Brexit has not had an effect. While house prices are still on the rise, this growth has seen a noticeable slowdown since 2016. This is a clear example of the uncertainty we’ve mentioned – nothing drastic has happened yet, but the market is bracing for impact.
The situation is even more pronounced on London’s property market. Unlike the country in general, ONS’s data shows that house prices in the capital have actually fallen by 0.7% over the same period. It is clear how the impending Brexit has played a part in this.
With the average price of a house being £473,000, London has by far the most expensive properties (more than twice the national average). As such, owning a home in London is a much more significant financial investment, and people are simply afraid to commit with Brexit looming.
All in all, this just makes it all the more important to find good estate agents if you have property for sale. UK house prices are at a tricky point, and it is imperative that you find the right offer.
Deal or No-Deal
Much has been made of March 29, 2019. It will certainly be a historic day, but it won’t be crucial for the housing market. Instead, what matters is the deal that Theresa May negotiates.
A no-deal Brexit could severely damage house prices. This may not reach the catastrophic proportions Carney talked about, but people could still find themselves in situations where their home is worth less than the mortgage. Although, these price drops could open up some opportunities for first-time buyers.
On the other hand, a good deal with the EU could restore confidence. In addition, this would include a transition period which would give the market more time to adjust, meaning we wouldn’t see anything change fundamentally until December 2020 (or longer, if the period gets extended).
Brexit is a monumental event, and we are still to see its full effect on the housing market. It’s not even possible to predict it because it all depends on the details of the agreement. But it has caused uncertainty, and the market has slowed down as a result. For the rest, we’ll just have to wait and see.
Whatever the case, it’s crucial to get expert help with property deals when there is so much uncertainty around. At Doorsteps, we can help you sell your property online and get the best deal possible. Brexit is sure to have an effect, but we can help you deal with it.