Brexit And Moving Home
Should I Buy, Sell Or Remortgage In An Uncertain Market
The UK property market is at its weakest for six years. Prices are either stagnant or falling across half the country. This is according to Britain’s official surveyors body. Reports state that sales will remain “in limbo” until a Brexit deal emerges.
According to The Royal Institution of Chartered Surveyors (RICS), its monthly survey of members found “the weakest reading since September 2012” for October. Prices fell in London, the south-east, south-west and East Anglia.
Predictions For The Next Three Months
Prices are expected to continue to fall in for the next three months They are forecasting they will remain flat nationally for 12 months.
Many surveyors said transaction activity has almost ground to a halt. Buyers won’t act until there is a degree of certainty over Brexit.
Simon Rubinsohn, chief economist at RICS, said: “The uncertainty about the economic outlook on the back of the never-ending Brexit negotiations appears a key drag on sentiment.”
RICS findings came just hours after Halifax, Britain’s biggest mortgage lender, said annual house price growth has fallen by 1.5%. This is it’s its lowest rate in more than five years. On a quarterly basis, prices have virtually stuck, rising just 0.2%.
A separate report from bank Coutts said prime central London is “in limbo” while the Brexit negotiations continue. They said prices were down 14.7% from their peak in 2014. Transaction activity had dropped by about a third.
Some parts of the UK are still active. Despite the Irish border remaining a contentious issue, the Northern Ireland’s property market is booming.
In Belfast the sales market has been strong especially over the past month.
In Hexham, Northumberland sales have remained consistent throughout October with little or no impact from Brexit concerns.
Bad news for tenants: RICS report that rents have begun to rise. It said there had been a “modest improvement in tenant demand during the three months to October”. Landlords were selling to avoid new buy-to-let taxes. While demand is rising and supply is falling, RICS predicts only small rent rises.
With Brexit dominating the sales market, other factors, such as stamp duty and interest rate rises, are also hampering market activity. This prevalent among high end properties.
“For properties marketed at over £1m, close to three quarters of respondents reported sales prices were coming in below asking prices,” RICS said. “What’s more, 14% cited sales prices were on average more than 10% below the initial asking price [up from 10% three months ago].”
So What Happened Since The Referendum?
Property price growth plummeted after the referendum in June 2016. Last month, Bank of England governor Mark Carney warned a no-deal Brexit could sink prices by a third.
Just months to go until Brexit and still no clarity over whether the UK will leave with a deal or not. What might happen to mortgages and house prices between now and then… and after we leave the EU?
House prices remained stable for a while following the referendum. This took place on 23 June 2016.
The same period the following year saw a similar pattern. Prices remaining remained static between July and March 2017. Historically, price growth tends to accelerate in the spring and stabilise in summer.
The rate of house price growth plummeted in the year after the referendum everywhere in the UK except Scotland. It continued to decline in England the following year. It picked back up in the other nations.
While the rate of growth decreased, actual house prices didn’t. Many say the slowdown in growth is simply a long awaited market correction.
Another way of evaluating housing market is transaction volumes. This is the number of properties sold per month.
Lower numbers of sales can indicate market uncertainty. This can be triggered by events such as an election or a referendum.
The referendum didn’t have much of an impact on transaction figures.
A spike was caused by the April 2016 introduction of a 3% stamp duty surcharge (page link) for buy-to-let investors. This also applied to second home purchases. Thousands rushed to buy before the change came in.
After the April transaction crash, numbers slowly crept up again, seemingly unhindered by the Brexit vote, although they still haven’t recovered to pre-April 2016 levels.
Pre-Brexit market for sellers?
Looking at estate agents and the average time it takes to sell can help assess the sellers market.
There has been a gradual uptick in both over recent months. It took an average of 60.5 days for a property to sell last month. This is the highest September figure since 2013. This could be due to uncertainty around buying in the run-up to Brexit.
Whilst there remains uncertainty the desire to be a homeowner has not subsided. Conveyancing Supermarket are an authority on the moving process from legal fees to useful guides to moving. We look forward to helping you at all stages of the process.