How will Brexit affect my property?

With Brexit dominating the news for the past three years, what effect has the political climate had on the UK property market?

By Louisa Fletcher, Property Expert

Since the result of the Referendum in June 2016, data suggests the UK housing market has continued to perform reasonably well. The number of residential properties sold over the last three years has been broadly consistent.

According to data from HMRC, approximately 1.2 million residential properties were sold each year in both 2016 and 2017, and 1.89 million homes were sold in 2018 1.

Data from HM Land Registry also indicates that price growth at a national level has also been positive overall in recent years. The average UK property value increased from £213,927 in June 2016 2, to £230,292 in June 2019 – that’s a rise of 7.1% 3.

Highs and lows

But look a little closer, and you’ll see a far more complex picture of significant house price growth in some places, and falling prices in others. Some regions such as Wales, the East, West Midlands, North West, Yorkshire and the Humber, have seen substantial increases in property values since 2016.

Yet, in London and the South East house prices have dipped in many areas, and the numbers of properties sold recently have also reduced.

What’s driving this divergent market? The answer, simply put, is partly about consumer confidence. In regions with a strong ‘leave’ vote, the local property market has continued to thrive because buyers and sellers feel optimistic about both their own personal finances and the local economy.

Conversely, in areas where the majority vote was to remain, consumer confidence appears lower, perhaps owing to concerns around job security and the wider implications of Brexit on the economy. When it comes to property, sentiment fuels markets.

Local factors

Of course, there are localised factors at play too. For example, in Wales, the end of tolls on the Severn Bridge has meant some buyers, who would have previously purchased in and around Bristol, realise they can get more “brick for their buck” by buying over the border. This has led to a rise in buyer demand and house price growth in Monmouthshire.

Likewise, in the Midlands, the various Government initiatives to re-energise city centres and promote business growth have meant that buyers are choosing to relocate there from other parts of the UK. This is creating increased demand that’s also had a positive impact on values. 

The impact of uncertainty

In any climate, uncertainty tends to create a more subdued property market, and we’d expect to see this in the run-up to a scheduled political event.

For example, it’s quite normal to see buyer and seller activity easing off a couple of months before a General Election, then picking up again a couple of weeks afterwards. We’re seeing a similar pattern now, although this uncertain period has been longer than usual.  

Reasons to be confident

There are positives to note. As Brexit opinions are relatively evenly split, it appears that positive sentiment counterbalances the negative. As a result, at a headline level for the moment at least, we’re seeing some stability in the market overall.  

Many mortgage lenders have maintained their competitive pricing, in some cases even reducing some product rates over the past few months. This means that for the near-term at least if you’re in the market for a mortgage then, you’ll probably be able to secure a good deal.

Mortgage affordability is a crucial factor to overall housing market stability, So, this is another contributor to the overall outlook, as are the current levels of employment and relatively steady inflation figures.

Stay or go?

What does all this mean if you’re trying to buy or sell a property now?  Simply put, it starts with understanding market sentiment in your own area. If buyer demand is strong, then it's likely to be business as usual when it comes to selling your property.

If you’re selling to buy another property, it’s important to research comparative prices to ensure that you’re not paying over the odds. Remember, an asking price is just that. It’s up to you to decide if you think the property is worth what it’s being marketed for.

If you’re purchasing a property with a mortgage, another thing to bear in mind is that chartered surveyors must confirm the property is worth what you’re borrowing against its value.

In buoyant markets, surveyors sometimes remain cautious and rightly so. This means that they may not value the property at the price you’ve agreed to pay for it. This is common in rising markets where prices have only increased recently, making it far harder for surveyors to find comparable sold property prices to support higher valuations.

For those selling in a more subdued market, it pays to be realistic about the price you may be able to achieve for your home. As well as taking the advice of your local estate agent, do your own research.  

Look at which properties have sold over the past six months and manage your expectations accordingly. In areas where demand has decreased, values in some cases are lower than they were in 2016 and 2017. This means that if you’re serious about selling at the moment, pragmatism is key. If you have to accept less than you hoped, remember that everything is relative.

If you’re aiming to trade-up to a more expensive home, you may find that you’re able to negotiate a reduction, which likely means you end up better off overall.  

Re-mortgaging and Brexit

For those staying put, property values are only relevant if you’re aiming to remortgage. If prices have only fallen slightly since the last time you took out a mortgage on your home then, providing you’re not aiming to raise any further capital and your personal circumstances have stayed the same, it’s likely to be straightforward. Especially if you’ve been making capital and interest repayments to date.

When we look back over the past 50 years or so, house prices have consistently recovered and re-adjusted positively following periods of market correction. In other words, if you’re planning on staying put for the next 10 years or so, then house price statistics are possibly irrelevant, if not interesting all the same.

One last word that will hopefully reassure; regardless of what happens in the next few months, UK property is still considered by many as one of the most desirable asset classes available.   

Louisa Fletcher

Louisa Fletcher is an accomplished property expert with 20 years of professional experience in the property industry.

Buying her first house at 19, Louisa caught the property bug and went on to buy, renovate and sell numerous properties throughout her twenties, always succeeding in making a profit. In parallel, she developed her professional career in the property industry and consequently, has worked with some of the largest estate agents, mortgage brokers, new home builders and property websites in the UK, as well as advising celebrities, sportspeople, high net worth individuals and even royal families on their property assets and portfolios.

Louisa’s book, Property Uncovered, was published in 2014 to critical acclaim, and provides expert advice for consumers on a range of property-related subjects including buying, selling, renting, letting, mortgages and renovating properties to add value. Louisa has worked in the media for over a decade, regularly sharing her expertise and advice on property-related topics and the UK housing market in columns and articles in national newspapers, together with appearances on This Morning, Good Morning Britain, ITN and Sky News.