Which? considers house price predictions for Brexit and beyondPrint publication
As the UK endures continued economic and political uncertainty and braces for the possibility of a no-deal Brexit, consumer group Which? has analysed the housing market over recent years and has published expert house price predictions for Brexit and beyond.
The article is interesting reading for mortgage lenders, homeowners, potential purchasers, landlords, developers, estate agents and property professionals alike.
In particular, the overall message to come out of Which?’s research seems to be less ‘doom and gloom’ than might be expected.
Some of the key points made by Which? and the experts consulted by it, from the estate agency, building, mortgage and buy-to-let sectors, include:
- Current political turmoil and the uncertainty over the terms (if any) on which the UK leaves the EU is affecting the housing market, but while the rate of growth has decreased between June 2014 (a couple of years prior to the referendum) and November 2018, house prices themselves haven’t. Many argue that such a slowdown is a long-overdue market correction in any event.
- Transaction volumes decreased between November 2017 and November 2018, and the average time for a property to go under offer increased from 62.5 days to 65 days in the same period…
- …however it’s not only demand that’s dropping, it’s supply too, as both buyers and sellers wait to see whether or not the UK leaves with a deal. Once there is a degree of certainty, the market may see a flurry of activity.
- In any event, it’s tough putting your life on hold for an unknown. Both the Which? report and a recent article by BBC personal finance reporter Kevin Peachy  acknowledge that life goes on. Properties will continue to go on the market, partly because of death, debt and divorce, and people will still have to move for work or for schools or, potentially in this market, because they are attracted by a discount.
- Even if Brexit causes a short-term fall in house prices, values are likely to stabilise over time, and so there is an argument to buy now if you view a property as a long-term investment. Uncertainty in other areas of investment in the UK could also drive up interest in the relative stability of bricks and mortar.
- The new-build market has remained strong in recent months – a trend which housebuilders expect to continue.
- In terms of mortgage deals, interest rates are currently very low, which could encourage borrowers to fix into a low rate to obtain some certainty and security for the coming years. There are also plenty of flexible products on the market, which enable borrowers to keep their options open if things do start to change.
A broadly consistent message is also coming from the Royal Institution of Chartered Surveyors. Whilst its UK Residential Market Survey for November 2018 reported subdued activity in almost all areas of the UK and an outlook which is the most downbeat since records started in October 1998, that pessimism relates to the next three months only; it refers to transaction volumes and price growth; it is blamed on the current lack of clarity around Brexit; and it is expected to result in the market remaining flat in 2019, and not in a fall.
The general message from various experts therefore seems to be that, despite low levels of activity in the market currently and in the immediate future, now is not necessarily a particularly bad time to be operating within the UK housing market – whether that be as a lender, borrower, seller, buyer, estate agent, housebuilder or landlord. Rather, the key will be to ensure that you are as fully informed as possible before proceeding with any transaction, that your objectives are clear and that any potential risks are mitigated.
If you would like any further advice or assistance in relation to issues discussed in this briefing, please do not hesitate to contact Louise Power or any of Walker Morris’ Financial Services or Real Estate specialists.