Could Brexit in 2019 cause growth in the property market?
Brexit is now closer than it has ever been. We’re just months away from the UK leaving the EU and the impact of uncertainty over the terms of the departure is affecting every industry. At times of uncertainty, people don’t tend to spend money. As a result, there has been a noticeable slowing in the property market as many people decide to wait and see what happens with Brexit before making any big financial moves. So, does that mean that Brexit is responsible for a property market slump or is there also the potential for growth?
“Uncertainty” has been the defining term for the Brexit negotiations. And, even now, we’re still not entirely sure what a British exit from the EU is actually going to look like. The impact on the property market has been to create drag. Even the spike that often takes place ahead of the run up to Christmas has been unimpressive this year. In terms of the numbers, there are two key pieces of information to note:
• In October this year, we saw the lowest rate of asking price growth for around eight years. In fact, the increase in the average asking price of housing stock entering the market was just 1%.
• House price growth is currently at the lowest rate it has been for five years. Monthly sale prices are effectively not moving, as financial caution means that many potential buyers are waiting to see how Brexit will pan out. The result is a significant drop in demand.
Are we due a spike in demand?
Despite the rather dismal looking nature of these numbers, it’s not all bad news. In fact, the decrease in demand could well be hiding a potential spike that is just around the corner. The reality is that the number of people looking to buy and sell remains the same but the current trend towards caution has almost everyone holding back.
There will have to come a point at which that restraint ends and, when that happens, activity in the property market could seriously spike. In addition, given the current conditions, for anyone looking to trade up to a larger home, next year could see the smallest difference between sale values and onward purchase price for five years. This could make it a great time to upgrade.
Other factors to consider
The 2018 Budget didn’t do a huge amount for the property sector. However, it did make it easier for more first time buyers to get onto the property ladder, extending Help to Buy and applying stamp duty relief to shared ownership properties. This, combined with the growing, unsatisfied demand, could open up the market to a wide range of buyers next year.
While Brexit is certainly making things difficult right now in terms of the fluidity of the UK property market, it’s unlikely that this will continue. Come next year, particularly after April 2019, Brexit could be responsible for a significant spike that sees widespread recovery in both prices and activity.