How Might Brexit Affect the Housing Market?
It feels like we have had the uncertainty of Brexit held above our heads for a lifetime…but with a new government in place and a date set to leave the EU, there is some great news for the housing market.
As the market stands now, the demand for property is way outstripping the supply, meaning it really is a sellers’ market. Obviously, this does raise the questions relating to the lack of housing which will be covered in a future post, but for now, sellers find themselves in an enviable position.
Whereas in the past, many properties would be put up for sale to ‘test the market’ to see what price and interest sellers could possibly achieve, now potential sellers are taking the decision to list their property extremely seriously. Subsequently more transactions are completing (https://propertyindustryeye.com/new-property-listings-dwindle-as-thousands-of-sellers-hold-back/ ) because the properties being listed are serious about selling.
What Else Has Impacted the Sales?
Mortgages have maintained a low interest rate over the past few years, and this has influenced many people in making the decision to move. Safe in the knowledge that there are many favourable deals out there to be had, potential buyers are leaving the uncertainty of Brexit behind them and instead taking the leap in to the market.
Employment is at its highest rate since 1971, and wage growth recently reached an 11 year high, giving potential buyers that extra security when making the leap to purchase. Combining this with the low mortgage rates available, sellers are finding themselves in an extremely strong position.
What Has Happened to House Prices Since the Brexit Vote?
Following the referendum in 2016 property prices did stagnate over the following months. This wasn’t completely unexpected, as this has been a pattern repeated in Spring most years, with the next few months seeing a plateau in prices. However, by late 2018 with the Brexit deadline looming, prices took a sharp downward turn leaving many vendors in a tricky position of whether to ride the wave out or continue to try to sell the property. For those who were able to wait, there has been some good news, as November 2019 saw the highest average house price on record £235,298. This could have been due to the new conservation government regaining its party majority, or simply because people were sick and tired of waiting.
What Has Been The Impact on the Amount of House Sales Completed?
Another way to assess the health of the housing market is to see just how many transactions took place per month. Surprisingly, the referendum did not have an apparent impact on the amount of house sales which were completed, however by early 2019, sales were down rather sharply from the same months a year previous. This may well have been due to the uncertainty over Brexit, or people wanting to wait for a general election to strengthen their position. Positively, activity did increase in December 2019, reaching a record number of completions and saw the highest number of house sales since early 2016.
A Strong Market For Selling?
2 key factors to take in to consideration when assessing the strength of the market for sellers are how long properties are taking to sell, and the branch stock levels across the UK. The stock level refers to how many listings each agency has live with them at any one time, and using date from Rightmove, we can see that the average stock levels in December 2019 were at 47 whilst a year previous they were only at 46. This marginal increase could well be because sellers were getting frustrated with how long their home was taking to sell, with over 700,000 properties being removed from the market.
Back in May 2016, it took an average of just 50 days for a property to go from being listed to under offer. However, in early 2019, the same process took an average of 77 days, the longest on record. Whether this is directly linked to Brexit, it’s impossible to tell. What we can say is that even though Brexit has impacted certain areas of the market, it isn’t all doom and gloom and there are still great purchases to be made out there…they may just be slightly harder to find.