Uncertainty is harmful to the property market, and it is fair to say that Brexit has brought about a lot of change. No one knows what Brexit means, what it will entail and right now, no one knows when, or if, Brexit will occur.
At the time of publishing, the deadline for Brexit is October 31st. That date ensures comedians have their jokes lined up, but not too many people are laughing about the impact of Brexit on the property market.
However, there are some signs that the property market may bounce back this summer. This is the opinion of Rightmove, who is on record as stating the Brexit delay may provide confidence in the market.
Rightmove believes the market is looking up
Information provided by Rightmove has resulted in industry observers looking positively at the Brexit delay. The price of new property listings rose by £3,447, an increase of 1.1% between March and April. The April figure stood at £305,449, and this was the sharpest increase for this month since 2016. Given that this period coincided with the passing of the initial Brexit date, some observers believe that the additional delay has resulted in slightly more optimism in the marketplace.
Miles Shipside of the company said; “No doubt there are still a lot of twists and turns to come, but this extension could give hesitating home movers encouragement that there is now a window of relative certainty in uncertain times. We are not anticipating an activity surge but maybe a wave of relief that releases some pent-up demand to take advantage of static property prices and cheap fixed-rate mortgages.”
Not every institution believes the market is positive
However, while Rightmove is a respected voice in the industry, they are not the only respected experts. The Royal Institution of Chartered Surveyors has stated a difference of opinion about the short-term future of the market. RICs believes house prices will fall across the UK until the end of the year while saying more dire predictions for London and the South East.
With leading bodies in the property market stating different opinions, it is no surprise that vendors and buyers are unsure of what to do. It is true to say that the property market has been volatile of late, even if the market has stagnated.
An example of the shifting nature of the market is found in figures published by Halifax. In February of 2019, the financial institution said property prices rose by 5.9%, but for March, they stated prices fell by 1.6%. People are desperate to gather as much information as they can about the property market, but when the market moves so quickly, looking at month to month figures may not be the best strategy.
What happened after the Brexit vote?
In the aftermath of the Brexit vote, property prices stagnated in the UK. Some observers said that the pattern in the immediate result of Brexit followed the standard model in the property market. It is common for house prices to increase in spring and then by the end of summer, house prices plateau. This outcome occurred in 2017 in the same manner as 2016, after the vote.
However, in the lead-up to the intended Brexit date, property prices fell by a more significant level after summer. Property prices were at a peak level of £232,797 in August of 2018, and then by November, this figure had dropped back down to £230,630. As of April 2019, the ONS House Price Index listed the average property price in the UK as £226,234 for February 2019; the lowest this figure has been since April of 2018.
Buyers have put their plans on hold
There is no denying that buyers and vendors have put their procedures on hand since the Referendum. Now that we are nearing an end, and some of the fears regarding a No Deal Brexit outcome being reached have subsided, there is likely to be more movement in the UK property market.
For further market movement, buyers who intend to stay in their new house for a long time are advised to be active in the market. One housing market specialist, Kate Faulkner from a leading property checklist website, said; “Buyers are holding back in the hope that prices will fall. But it’s not only demand that’s dropping – supply is, too, with many people battening down the hatches until we have a clearer picture of what’s going to happen. I don’t think buyers should be put off by fears of a house price crash as long as they mitigate the risks. If you bought a property now, even if it did drop in value in the short term, the market would probably have corrected itself by the time you wanted to move.”
Buyers who wanted to move in and then out in a relatively short time-frame are likely to have concerns about the market once Brexit occurs, but for people who want to settle down, there is less to be concerned about.
Consider which mortgage is best for you when buying property in 2019
Anyone looking to buy soon but who has concerns about Brexit may feel more confident about opting for a variable-rate mortgage as opposed to a fixed-rate mortgage. There is always a choice to be made between fixed and variable and with so much uncertainty regarding the economy, there may be a chance for people to benefit from the right choice. However, for people who fear to make the wrong choice, the threat of being locked into an expensive fixed rate mortgage may be off-putting.
Whatever happens with Brexit, it won’t be the first time the UK property market has experienced ups and downs. If you are keen to make the most informed decision, speak with a property market specialist who has experienced peaks and troughs in the market. At Country Properties, we aim to provide you with the best standard of service, so get in touch if you’re keen to make a move or want more guidance or advice on what to do next.