Brexit and the Housing Market.

The majority of people in the UK do not understand the implications Brexit may have on the housing market, what they do know is that it could have an effect and the fear has driven house sales to a two year low.

Ask any estate agent how ‘business is' and they will all say very slow because people are worried about Brexit, but what are they concerned about? I used to worry about monsters under the bed, but they were never there, so is this fear manufactured by the media and politicians, or is this fear a reality, and how bad will it get?

The Governor of the Bank of England is concerned, stating that a no-deal Brexit could wipe 35% of the value of houses over 3 years, now that is a concern and brings back memories of the 1980's where we saw people handing back their house keys, but that was a very different market, for a start interest rates were well over 10%, and people just could not afford to pay their mortgage repayments.

If house prices did fall by 35%, that would not affect a person's ability to pay, just that their equity has evaporated which could stagnate the market for a long time as people will not be able to move because they are in a negative equity situation.

But those falls are a long way off, the market in London has slowed, falling 0.7% in the past year, but the concern is that transactions are down 20% and falling. Outside of London prices remain on the rise with up to 5% not uncommon, but if history tells us one thing in the housing market, it is that where London goes most of the country will follow, especially in the Home Counties.

Most people, including myself, will point to the measures brought in to control mortgage lending as a significant factor of the slow down; people just can't borrow enough to be able to afford a property.

Brexit has compounded this, many people given a choice will wait until after Brexit and see what happens if you are thinking of buying a property and someone says the value is going to fall by 35% you would consider holding off. Putting this slowdown into perspective in 2017 more property transactions were undertaken than in any year between 2008-13, so yes, the market has slowed, but it's still better than it was.

You could argue that people are concerned about their jobs post-Brexit and that money from overseas has dried up; however, a weakening currency can see the UK market as an attractive investment.

The key is an agreement, the concern in the market is uncertainty and an agreement should take away that uncertainty, so it's not March 2019 we should look towards its the agreement that will precede that. It is very clear that whatever the deal, good or bad, it will be exploited by politicians to achieve other objectives and will be slated by the opposition and those looking for a new Conservative leader, so an agreement with the EU still needs to be approved by Parliament.

On the bright side mortgage rates are low, we are expecting some increases, but they should be gradual and will depend on how inflation and unemployment fairs after Brexit.

The sooner this uncertainty is resolved, the better, in the meantime expect more prophecies of doom, we have been living in an uncertain world for as long as I can remember, many so-called experts predicting this and that and ending up way off that mark, perhaps uncertainty is certain and those thinking of moving should take advantage of the market for its a buyer's market at the moment but no one is putting that as a headline.