In the last few weeks, Google has recorded a huge number of searches on the term “How will Brexit affect…….?” High on the list of topics attached to this question is the repercussions for property prices and mortgages.
So now Article 50 has been triggered, how will Brexit affect your plans to upgrade to a bigger home, downscale to something more financially manageable, or uproot to a new location?
Property Market Caution
The referendum’s effects are already apparent in the UK property market, as the latest figures show a drop in the number of people moving house in the second half of 2016.
This appears to show that the British are increasingly cautious about making any major new financial commitments, and there is a lack of confidence in the economy post-Brexit.
The main impact of any property market growth slowdown has been felt in London. UK cities such as Manchester and Bristol have seen healthier price growth than the capital city in recent times. Again, it is no doubt the austere and uncertain times that are holding back price growth in the country’s business and financial heartland.
That’s not to say that house prices are falling, and indications are that they will continue to rise, just at a slower pace.
Two Years Of Housing Caution
As for the future trends in the property market, a lot depends on whether Britain’s exit from the EU is drawn out, complex and controversial, or a smooth passage to a new era. Now that Article 50 has been triggered, there will be two years of negotiations and no one knows how this will pan out economically.
Clearly, this period of uncertainty could well be reflected in the UK property market, in the form of showing great caution about what property to buy, and whether to move at all. This could keep the property prices stable but be flatlining for some years.
Jobs market effects house moves
One way in which Brexit is fuelling caution – and potentially decreasing the incentive to move home – is the impact it may have on jobs. There has been much talk of tens of thousands of EU workers having to return to their home countries, which in theory leaves more openings for the indigenous workforce. However, these tend to be low skilled openings that have not found favor with the British.
On the other hand, British companies who trade overseas are headlining the rising costs they face post-Brexit and their own fears for financial stability, leaving a question mark over large-scale redundancies.
This again leads to increased caution to commit to the major expense of moving house. Loss of jobs can lead to more people having to sell up and downscale to make ends meet.
Increasingly savvy house buyers
Inflation will continue to play a part in the property market too. Faced with the rising cost of living, people may choose to renovate and expand their properties rather than go to the expense of moving home.
Have you noticed that many goods in supermarkets are getting smaller, but the price is staying the same? This illustrates the trend of keeping up the appearance of cost stability when in fact the whole economy is moving towards keener, leaner processes and protecting profit margins.
The effect this is having on the British buying public is that they are becoming increasingly conscious of the need to shop around and work hard to find the best deals, not accepting things on face value. This increasingly savvy consumer group is the same people looking around your property.
They will be increasingly unwilling to trust marketing hype, will ask more searching questions and will want to check things more thoroughly than ever before. This also means they will be far more ready and willing to haggle on price too.
What if you want (or need) to sell your house quickly?
In the words of Nationwide Building Society chief economist Robert Gardner: “Looking forward, house price prospects will depend crucially on developments in the wider economy, around which there is a larger degree of uncertainty than usual.”
Property prices being stable is reassuring, and pundits don’t expect any major price drops in the housing market. However, this prevailing mood of caution may leave you with a shortage of buyers. Also, any potential buyers you do find may drag the process out, making sure of every detail before they agree to sign on the dotted line.
One valuable alternative to bypass the reluctance of buyers to take the plunge is to opt for a quick sale from a cash buyer. This route to selling your house quickly is ready and open to you, pre and post-Brexit. Contact Mark King today to find out more.