How is Brexit really affecting the property market?
ELECTION UPDATE: A year after first publishing this blog on the subject of Brexit and it feels like we are no further along than we were then! With a snap election now thrown into the mix surely this just creates more uncertainty for the UK housing market leaving agents, landlords and tenants in a state of flux about the big property questions; Is there enough stock? Are house prices going to plummet if we have a no deal Brexit? Is this the right time to buy an investment property? what sort of mortgage should I get? Could changes to immigration policy reduce demand?”
Which.co.uk appear to have been on a fact finding mission and in their recent article “What will Brexit mean for house prices?”, they go some way to try to answer these questions – https://www.which.co.uk/news/2019/11/what-will-brexit-mean-for-house-prices/.
Happy reading and let’s hope we’re not still looking for answers this time next year!!
While we know that everyone is sick to the back teeth with this subject, unfortunately, it can’t be avoided and its affects will continue to resonate in every part of daily life for years to come, whether this is clearly apparent to us or festering quietly in the background, it will be there in some form or other.
Nobody seems to know anything for sure, there is much cross-questioning, probing, debate, and downright vagueness from those that should be guiding us, but what we do know is that uncertainty affects confidence and this breeds insecurity, resulting in us all battening down the hatches and staying put. Unless of course we really have to move.
When the vote was cast and our course decided, initially little seemed to change but as the March 2019 exit date sidles nearer, people seem to be holding fast with ever more force and the property market creakingly grinds to a halt.
Various reports site reasons for this, including estate agents’ stock being at an all-time low, which is in part to blame for buyer demand reducing month by month. London seems to be experiencing the steepest fall in house prices, which could be partially attributed to the extensive prime market skewing the results.
Now, normally when sales are stagnating, lettings are on the other end of the see-saw and so naturally rise, but here’s the twist, it’s not so this time? With tenant demand actually rising, the problem again is stock with the number of properties available to let declining month on month. The buy-to-let market used to keep stock levels quite fluid but with taxation changes and the uncertainty through Brexit, those accidental landlords are now choosing to sell up, therefore reducing stock levels further.
Some experts are saying that uncertainty is not necessarily a bad thing and could play in the favour of investors, depending on the strength of their gall. With prices stagnating and largely falling in many areas and mortgage rates at an all-time low (Moneyfacts show average rate for 5 year BTL deal is 3.4% the lowest since it started collecting data) maybe the betting man could come up trumps if he decides to either; stand firm and hold on to that portfolio until the uncertainty dies down or sell up and reinvest in a wider more diverse portfolio where yields might be more attractive. Savills Research lists London’s 5 year growth as a mere 4.5%, whereas Yorkshire and Humberside being 20.5% over the same period, indeed food for thought!
So, in a nutshell, yes Brexit is affecting things, fairly massively, people are staying put and houses prices are stagnating, buyer numbers reduce, while sellers refuse to reduce prices therefore halting the market. What should be good news for the lettings market is that renter numbers are on the increase but it turns out they have nowhere to rent. Buy-to-let landlords are selling up and foreign buyers aren’t coming in such great swathes so the prime market is dropping significantly. London looks gloomy for 2019 but maybe the golden egg, for once, lies somewhere other than the Capital? The saying after all is; who dares wins and maybe that is truer than ever right now.
It looks like it could be a tough market for the foreseeable future and in tough market conditions, the only thing that is guaranteed is that you need to provide the best possible service. A great inventory service can provide security for landlords and peace of mind for tenants. So give us a call today to see how we can help soften the Brexit blow.