I frequently get asked what is going to happen to the housing market and “If only I knew” is the automatic response. With the UK experiencing the greatest level of political turmoil for many decades and no clear picture on what is happening in the world economy, uncertainty has been generated and this is causing buyers and sellers to sit tight in increasing numbers.
As the vast majority of estate agents agree, the market has become heavily influenced by one issue: Brexit. The outcome of Brexit could have a dramatic impact on the housing market. The Bank of England says that a no deal Brexit could lead to house prices falling by up to 30% whilst a disruptive Brexit could result in falls up to 14%. On the converse, with pent up demand building, a deal and a smooth transition could quickly lead to confidence returning and values rising. Much depends upon the next few months.
The RICS, and I tend to agree, fail to see how the Bank of England has reached its conclusions. Those seeking to buy a property will be aware that very few homes have come to the market since the referendum in 2016 and this lack of supply has helped to underpin values. Whichever way Brexit goes, the UK is still a stable country compared to many others and there should be an end in some way to the current uncertainty. It is not necessarily Brexit that is having the impact but the uncertainty created by it and we are very good at creating our own crisis. If we carry on as normal and try not to respond to the uncertainty then we could come through this monumental event in a much better way.
Last year, house prices in the South West grew modestly. With London and the South East seeing values fall, we saw modest growth of between 1 and 1.5% whilst other regions of the UK performed better with house prices in the North and Northern Ireland increasing by up to 5.8%. First time buyers were the most active group in the housing market whilst existing homeowners with mortgages saw little reason to move. It seems that those who would normally look to “upsize” have decided to exercise caution, not take on a bigger mortgage and take advantage of low interest rates in reducing debt.
As Brexit has got closer, the market has become more subdued and values in December stagnated. This is likely to be the case for a few months at least as the balance of demand and supply shifts more in favour of buyers. An uncertain market can create opportunities and those seeking to buy could secure a realistically priced property before the market starts to recover once the uncertainties of Brexit recede. Those selling are well advised to be realistic in their expectations and should bear in mind that selling and buying prices are relative and achieving a sale now could provide a great opportunity to buy well.
So what do the experts say? Well, there seems to be a consensus that, following Brexit, the market should return to steady growth of up to 4% per annum. Hometrack predict a 3% rise whilst the Halifax consider a 2% to 4% increase is likely. Rightmove and the RICS are more conservative predicting a slight improvement in values. Generally, the commentators get it right but it seems that even they are less confident this year. I suspect that it will be a case of steady as she goes and no one should drastically alter their future plans on the basis of what may occur. Buying and moving home is a long term decision that has an impact on the enjoyment and practicalities of life – whilst we are bound to be concerned on the impact of Brexit, life has to go on!