Over the last couple of months, I have had many questions regarding the dreaded ‘B’ word and the effects it will have on the property market.
Unfortunately, it’s a question that can’t be answered with any sort of clarity. There is no-one in the UK that can justifiably give an accurate overview because there are so many possible outcomes and our economy is reliant on so many factors including business, social, political and outside influences.
The so-called property gurus who crunch their figures and analyse the fluctuating property market vary in their conclusions, some reports including from Mark Carney, the Governor of the Bank of England, who recently remarked that a No Deal Brexit could mean a drop of 30% in house prices. But this was an extreme scenario as any effect on the property market will depend on the details of the deal or no deal. Scaremongering, maybe, but over the years the property market seems to have a recurring pattern.
If you take into consideration that the historical housing market cycle may span a 15-20-year period…property prices fall, the market takes some years to recover. The market then solidifies and grows until it levels out for a couple of years, growth builds again before a market correction leads to another fall or levelling off.
The last crash was 2007-8 and the one before that was 1988-89 and the one before that in the 70’s and then the 60’s. Is Brexit going to cause the next crash? Possibly! But we don’t even know if we have a no deal or any deal! Forecasting is merely a collection of data gathered from various third party contributors who you rely on as being accurate. In actuality, it’s more a calculated guess and that’s why we have so many conflicting reports. Even the top sector analysts are unsure of where property prices will lie after March 29th 2019. In a recent BBC online news article entitled ‘ UK house prices: Will the value of your home change in 2019? The article was published on 3rd January 2019 by Kevin Peachy, he remarked on the views of Property Experts and their predictions for 2019:
Experts’ 2019 UK house price predictions
Richard Donnell, property market analysts Hometrack: 3% rise
Andrew Montlake, mortgage broker: Coreco: 1% to 2% rise
Henry Pyor, housing market commentator: 5% fall
Miles Shipside, property portal Rightmove: no change
Andrew Burrell, Capital Economics: 1% rise
Simon Rubinsohn, Royal Institution of Chartered Surveyors: no change
Russell Galley, mortgage lender the Halifax: 2% to 4% rise
Full article: https://www.bbc.co.uk/news/business-46543252
So, as you can see, it is not that I can’t or won’t predict what will happen with the property market after Brexit, it’s more of there’s no real definitive answer. The only thing I can say, is no matter the outcome it is going to be a bumpy ride for a while and not just in the housing market. As the country adjusts to life post Brexit, every sector of our lives will be affected in some way, but realistically we have to just take every day as it comes. In my view it’s best not to take everything so literally.
One thing is sure, there are normally winners as well as losers in any given situation and some things never change. In the UK housing market, demand for housing still far out ways supply!