Despite months of endless negotiations, street demonstrations and unrelenting squabbling in the House of Commons, the cloud of uncertainty surrounding Brexit still hasn’t become any clearer.
The original exit deadline has been and gone, with Theresa May seemingly no closer to agreeing a deal and now hoping to extend the deadline until the end of June.
Somewhat inevitably, this shroud of ambiguity and doubt is causing a great deal of concern among homeowners and prospective buyers. While the UK faces the possibility of leaving the EU without a deal, the true implications of a hard Brexit remain completely unclear; with buyers and sellers unsure of whether they should hang fire or strike in the midst of such uncertainty.
Whether you’re hoping to invest in property development or sell your existing home, the impact of Brexit simply cannot be ignored.
Are UK House Prices Stagnating?
Earlier this year, data from the House Price Index showed that house price growth was stagnating at just 1.7%, the lowest rates since 2013. More recent data from Rightmove, published in March, shows that the average asking price for a home has dropped by 0.8% compared to the same time last year.
Of course, these figures relate to the national average, and house price growth will very much depend on the area you’re buying or selling. For example, last year house prices in London fell by 1.7%, with many other areas in the South East of England also struggling. In contrast, house prices in the North West rose by 4.6%, while growth has also been particularly strong in the East Midlands and other places further north.
Overall, despite the sheer amount of Brexit uncertainty, house prices have remained remarkably steady in the wake of the 2016 referendum. Although these prices are yet to experience a significant drop, the slow growth rates are what’s proving so concerning for sellers, with buyers uncertain whether a hard Brexit could trigger a market crash in the near future.
The Slowest Market For 6 Years
At the end of last year, the Royal Institution for Chartered Surveyors (Rics) claimed that the UK property market was at its slowest for more than 6 years. Their data suggested that both supply and demand were at their lowest rates since 2012, with the looming shadow of Brexit making plenty of homeowners understandably jittery.
However, despite the average home taking around 4 months to sell, the number of transactions has actually remained steady over the past 12 months; while 2018 saw first-time-buyer mortgages hit their highest levels in a decade.
How Could a Hard Brexit Impact House Prices?
Back in September, the governor for the Bank of England Mark Carney, claimed that a no-deal Brexit could see house prices fall by up to 33%. Although he was simply outlining a worst-case scenario, such a prediction has undoubtedly made buyers and sellers much more hesitant. More recently, market experts have express concern over how a no-deal Brexit will impact the market, while the Office for Budget Responsibility (OBR) predicts a 0.3% drop by the end of 2019.
Unfortunately, there’s no way of knowing exactly what will happen, which is why Brexit continues to cause such uncertainty and disagreement amongst experts. Whether the UK leaves with a deal or not, however, the general consensus is that prices will continue to stagnate following the departure; while the possibility of a full-blown crash remains unlikely.
Is Now a Good Time to Buy a House?
For first-time buyers, this is an incredibly exciting time. House price growth is continuing to stall and flounder, leaving the door open for them to make a great investment before any Brexit-related consequences hit the market. With the assistance of the government’s Help to Buy Scheme, buying a home suddenly seems much more affordable than it did five years ago.
But buying a home is always going to be a significant investment, so you certainly shouldn’t make any rash decisions or pull the trigger too early. If you’re planning on buying somewhere to live long-term, however, then this is undoubtedly a great time to invest—at least in some parts of the country.
Either way, if it’s the home of your dreams and the price is right, then you shouldn’t let any Brexit uncertainty hold you back.
The infographic below by The Blackmore Group shows how Brexit is impacting the UK property market.