House Prices on the Verge of Falling Further with No-Deal Brexit

The no-deal Brexit deal is causing jitters in the property market, regardless of whether you support or staunch Brexit. Though the terms of leaving the EU are not predictable, the Brexit’s uncertainty has already affected the property markets since 2016. Curious you might be, accurately predicting Brexit’s impact remains a challenging game, even for me.

According to the recent report released by KPMG, an accountancy firm, house prices are likely to nosedive by at least 6% in 2020, if no-deal Brexit is passed. Major cities are likely to be hurt the most, with Northern Ireland and London likely to experience the highest price falls of 7.5% and 7% respectively. Though it’s impossible to confirm the report’s accuracy, it’s clear to every avid property owners that prices will drop.

How Will Prices Look Like After No-Deal Brexit

The extent to which the housing market will be affected is difficult to quantify, given that the property market is tough to predict even in normal market conditions. KPMG, seemingly unsure of its predictions, further notes that in the worst-case scenario, a drop of between 10% and 20% is possible.

However, the report can be relied on since the prices will depend on how consumer confidence will shift. It’s a game of consumer’s balance. If their confidence falls, the housing market will suffer, and if the consumer confidence remains high, the prices will remain relatively stagnant.

Possible Changes To Be Seen After No-Deal Brexit.

Undoubtedly, no-deal Brexit is the default option if no agreement will be reached. As the majority of MPs remain opposed to it, many financial analysts and investors continue to express major concerns about the potentially dire consequences associated with no-deal Brexit. 

According to a July report released by the Office for Budget Responsibility, housing prices are likely to fall by about 10% towards mid-2021. Earlier on in February, Mark Carney, the governor to Bank of England, noted that in case there would be a no-deal Brexit, UK growth will certainly fall. 

House prices have been falling since June 2016 when the referendum started, except in Scotland where prices remained stagnant. Some experts argued that the prices were stagnating as a normal cycle where prices only increase in spring and stagnate over the other months. However, as Brexit gets closer and closer, house prices continue to fall more sharply than in 2018. In 2019, a market comparison chart shows that house markets are falling across the whole of the UK.

With many people speculating that the property prices slow down is as a result of long-overdue market correction, Brexit’s impact and its destructive role in the housing market cannot be overruled. 

Brexit’ Impact on Transaction Volumes So Far

A closer look at the house transaction volumes per month indicates concerning results for house owners and developers. With market uncertainty characterised by a low number of sales, experts can tell that things are not getting better any time soon. An evaluation of statistical data from HMRC shows a dramatic decrease as figures dropped from 101,210 in July 2018 to 86,240 in July 2019. 

Additionally, HMRC data indicates that people are taking longer time to sell their residential units as Brexit verdict nears. Worth noting, the average number of days taken to make a single sale shot to 77 days in January, the highest ever recorded. The wavy and constant nervousness surrounding consumer confidence continues to worsen in 
the run-up to Brexit.

What Different Experts Are Advising Ahead Of Brexit

Mortgage brokers are advising people to avoid fixed rates. The recent price drops allow buyers to take advantage by making it their market. Mortgage rates are alluringly low tempting many to jump into fixed rates. One should consider other alternatives before jumping into fixed rates.

As an expert and property writer for propertypriceadvice, I would advise people to buy their properties now if they are considering a long term ownership. However, the market is hopeful that once the looming political impasse is addressed, and the terms of Brexit are made clear, consumers will breathe a sigh of relief. As the cloud of uncertainty hangs glaringly closer in the housing market, it’s good for homeowners and sellers to keep their plans on hold, just for a while.