- Saturday, June 25, 2022
By: Radhakrishna N S
By Howard Robin
ARE you thinking about buying a house or flat, investing in the buy-to-let market or re-mortgaging your home?
If you’re one of the million-plus people who has been involved in a UK real estate transaction over the past six months, the chances are the B-word is seriously on your mind.
Will Brexit really happen before the October 31 deadline? Could it really be a no-deal? Most critical of all, what effect will be leaving the EU (or not leaving) have on property prices?
Whatever side of the Brexit divide you’re on, there’s no escaping its effect on our relationship with bricks and mortar.
According to the latest figures, the number of property transactions in the UK has fallen by 16.5 per cent year on year. Meanwhile, rumours that the Bank of England may cut interest rates later in the year is further fuelling the uncertainty that is faced by people thinking of moving or remortgaging.
With Boris Johnson’s premiership just weeks old, the biggest question is what effect a no-deal Brexit will have on house prices. Last month, the Office for Budget Responsibility said property values could fall by around 10 per cent in the first two years after a no-deal Brexit. This followed a warning from the governor of the Bank of England of a 30 per cent crash in house prices if the UK leaves the EU without a withdrawal agreement.
According to the Office for National Statistics, the rate of house price growth has stalled across the UK since the referendum of 2016, while the number of residential properties bought and sold has also remained static, with just 84,490 completed transactions in June 2019, the lowest number of monthly property sales since April 2016.
So, what do the experts think? Is now a good time to buy or sell, or is it better to wait until the political uncertainty is resolved?
Mortgage broker David Blake says the fall in prices in some parts of the country has created a buyers’ market which, coupled with extremely low mortgage rates, may be tempting some purchasers to make a quick decision.
“The political situation may be in turmoil, but it’s important that buyers and homeowners don’t panic or make any rash decisions,” he says.
Blake points out that the very low mortgage rates, coupled with the uncertainty around leaving the EU, is encouraging many purchasers to negotiate a fixed-rate mortgage. He advises caution: “Don’t just jump into a fixed rate without considering the alternatives. There are plenty of flexible products that would leave your options to remortgage open if rates did start to change.”
Kate Faulkner, the founder of housing website propertychecklists.co.uk, believes the long-term viability of the housing market is sound but advises prudence over the short term: “I don’t think buyers should be put off by fears of a house price crash as long as they mitigate the risks. If you bought a property now, even if it did drop in value in the short term, the market would probably have corrected itself by the time you wanted to move.
“However, if you’re considering buying for the short term, it’s more complicated.
“Transactions are likely to drop over the next few months and it’s possible that interest rates could jump back to their pre-credit crunch levels of six-to-seven per cent if a no-deal Brexit causes issues.”
Miles Shipside, Rightmove director and housing market analyst, said: “The housing market fundamentals remain largely sound in many parts of the country…With record employment, low-interest rates and good mortgage availability, buyers have a lot in their favour apart from the lack of political certainty.
“Those who have postponed their purchase should note that estate agency branches have more sellers on their books than at any time for the past four years, so there should be more choice of properties to buy.”
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