How has the uncertainty of Brexit impacted the property market?
News & LegislationSeptember 13, 2019
How has the uncertainty of Brexit impacted the property market?
Whether you are an avid Brexiteer or have staked your flag in the Remainer’s camp, one thing is for certain, and that is at the moment - nothing is certain. One thing there is no doubt about is that the continued political turmoil and the uncertainty surrounding Brexit have left their mark on the housing market.
We spoke to Guild Members about their views and opinions on Brexit and how the current political climate it is impacting their local property markets.
Activity has reduced
The latest data from HMRC UK Property Transaction Statistics show a dramatic year-on-year drop of 12% in the number of residential transactions in July 2019 (86,630), the lowest figure since April 2016.
According to Philip Bartlett of Carringtons Estate Agents in Kingston on Thames, Brexit has had an impact in terms of reduced activity in the region. He notes that, despite the lower levels of activity, there is still a good demand for homes priced between £600,000 and £800,000, however not much supply in this price range. “It is also very apparent that many buyers are waiting to find a property to buy before placing their own property onto the market. As there is a shortage of property, they are reluctant to risk placing their property onto the market as they fear that they will not be able to find a suitable property to purchase. The trouble is, when a good property does come to the market – they find themselves in competition with other buyers and, quite rightly, vendors are selling to proceedable buyers.”
Operating in the affluent Royal Borough of Kensington and Chelsea, Managing Director of Rickman Properties, Kieran Ryan says the current turmoil in Parliament, is seriously affecting any property from £2 million upwards. “Brexit is on everyone’s lips and the uncertainty of everything that is said is having a negative impact in our market place in the Royal Borough. The complete uncertainty of whether we are out or in leaves people’s minds well away from moving.”
Some markets have levelled
With Brexit edging closer, house price growth has slowed everywhere but Wales, which has seen an improvement. House price growth in England was the weakest with a 0.72% year-on-year increase. Source:UK House Price Index, released 14 August 2019
Joe Masterson, Branch Manager at Benjamin Stevens Estate Agents in Bushey, says that their local market has seen a levelling off of the relentless increases which were the norm before 2017. “Whereas previously buyers were paying extra for ‘off-market’ properties to secure them or viewing and offering within short order, this is no longer the case,” he says, “Often buyers are being cagier with their offers and trying to feel out what price points a seller will accept. Indeed, this has led to several occasions where buyers make ‘off the cuff’ offers with little or no intention of backing it up even if the offer were to be accepted. This has meant agents need to scrutinise not only a buyer’s offer, but also their intention to actually move forward if a price is agreed.”
An apathetic market
According to the Rightmove House Price Index, in January this year, the average time for a property to receive an offer was 77 days, the highest on record. This has dropped to 54 days in July.
Partner at Holroyd Miller, Jonathan Kidd, comments: “To be perfectly honest, the sooner the government reach a decision, the better. The current political indecision has resulted in a distinct lack of urgency in general decision making. Whether dealing with developers or vendors, no one is in a rush. Don’t misunderstand me, there’s no panic, or fear, just apathy, most people we speak to are absolutely fed-up of the current situation, but more than happy to get on with their lives rather than leaving things on-hold.”
Some markets have remained buoyant
Servicing the Cardiff market, Kelvin Francis, says that while matters were building to a head in Parliament during August, the Cardiff market remained buoyant. “There were a record number of properties coming onto the market for sale in July, followed by a higher number for sale in August than 12 months ago. The number of properties sold equated to those in May, which were the highest number, by some way, of any other months in 2019. We have noticed a “bounce” in activity before each Brexit deadline. It happened in March and again in August, but generally we would say the market is healthy and steady, indicating that the general view is that “life must go on”. We will be watching to see what effect these recent most turbulent events in Parliament may have, but so far we have observed no noticeable effect,” he explained.
Some are seeing the silver lining
A Director at Home Sales & Lettings, Graham Wood, says that he has spoken to investors who are looking at the current state of uncertainty as an opportunity. “One of the investors I spoke to is looking to purchase two one-bedroom apartments in a town centre location where the developer had recently rented out four units because he could not sell them. After almost 12 months the developer still has eight out of the original 12 units sitting vacant. The investor saw this as a good opportunity to acquire for his growing portfolio.”
Miller points out there is still high demand in some sectors. “We’re still receiving plenty of interest in residential and commercial properties, and interest in development stock is high. However, there has been a slowing down of interest in the higher end of the market, mainly in residential properties over £700,000. In reality, the high-end market has never been fast-moving, so it hasn’t been a cause for concern for us. Like everyone else, we’re just waiting for a decision.”
According to Ryan, in Kensington and Chelsea, there are quite a few overseas buyers taking advantage of the low pound and a 20% price drop in purchasing selective properties in the area.
Bartlett says that for many, life moves on and they have no desire to wait for Brexit to unravel. “Some buyers have their eyes fixed on the future and know that over a five to ten-year period they would have benefited from great capital appreciation of their property and now have good deposits to transition upwards, benefitting from the superb mortgage products currently available. If only there were more supply for the buyers to choose from.”
What does the future hold?
The Guild CEO, Iain McKenzie, says: “While there is currently a lot of uncertainty surrounding Brexit, it is essential that homeowners recognise that economic data remains remarkably strong. The housing market, albeit slightly down in transactional volume, is remarkably resilient with correctly priced homes selling well. The lack of clarity surrounding Brexit is disconcerting, however, once a decision is made, and we know the future direction of our country, I expect to see the pent-up frustration of hopeful movers released and a mini resurgence of the housing market.”