Estate agency Haart has warned that extended Brexit negotiations could cause property transactions to dip by 20 per cent in 2019.
Haart’s figures show that buyer registrations are up by 37 per cent, but Brexit uncertainty is holding back transaction levels.
Haart chief executive officer Paul Smith says: “Despite negative Brexit rhetoric from Westminster and the industry, the property market remained resilient in October. Although prices dipped slightly (-1.4 per cent on the month), it is very promising to see transactions across our entire network increase by 2.4 per cent on the month and the year (9.7 per cent), showing that despite uncertainty, buyers and sellers are still motivated to transact.
“Twenty-nine months after committing to leave the EU we finally have a Brexit deal on the table, however political infighting is at its highest level and a number of scenarios could play out which would affect the property market in different ways. Government data shows that while total transactions have risen by 53 per cent since 2009, over the past four years, they have largely remained stable, sitting at around 1.1m annually despite the referendum being called in 2016.”
Smith went on to say that even if the UK encountered a hard Brexit, we’d be unlikely to see the significant price falls encountered during the credit crunch. He suggests that increased regulation of the banking and mortgage market, a shortage of supply, and government support for first-time buyers, means a more likely outcome would be a reduction in transaction volumes.
“While this uncertainty would result in fewer homes coming to market, demand will continue to outstrip supply as at the end of the day people will always need to move home for various reasons, which will ensure that prices continue to hold-up regardless of the outcome,” he says.
Smith has set out four scenarios and the likely effect on the property market. The first scenario is we leave the European Union with a good deal. Should this happen, Smith predicts a “super-charged” property market in 2019 and an uplift in transactions of 10 per cent in the second half of the year.
The second scenario is the leave the EU with no deal. Smith says this would likely result in a short-term blow for the property market, at what would normally be a peak time of the year for activity. However, he estimates that prices would be unlikely to fall by more than 5 per cent.
Smith’s third scenario sets out what would happen if there was a challenge to Theresa May’s leadership. He says: “In this instance we’d undoubtedly see more homeowners holding off listing their homes, resulting in a drop in transactions of roughly 2 per cent and potentially house price dips. Unsurprisingly, I would expect London to be hit the hardest.”
The final scenario Smith looks at is an extended Brexit negotiation period. This, he says, could be as detrimental to the property market as a no deal scenario.
“Extending negotiations would only encourage further uncertainty, resulting in a delay among buyers and sellers. Should this continue throughout 2019, we could expect transaction volumes to dip by as much as 20 per cent, further stunting any opportunity of economic prosperity at a time when we need it most.”