Is the housing market headed for a post-Brexit bounce?
Russel Quirk, co-founder, Properganda
One of my favourite films is Trading Places, whereby Dan Aykroyd becomes ‘an experiment’ to see what happens to people when their privileged lives are suddenly ripped away from them.
In the case of the UK property market, the Mortimer and Randolph Duke in this scenario are, respectively, our parliamentarians and the EU’s negotiators, cynically and self-servingly seeking to destroy without regard for the consequences.
By now, three years after the EU referendum, property values and transactions should be sprawled in the gutter, malnourished, battered and bruised. Yet, in deference to the antics of the elitist architects of its intended demise, it resembles a rather more composed figure. Though not altogether unruffled from its experience, it remains relatively well-heeled and certainly not the disgrace that was thought inevitable by some.
Property values are now around 8 per cent higher than in June 2016 and transactions have, if anything, increased. The latest numbers from the Land Registry show January and February 2019 to be about 4 per cent up on the same period in 2018.
This, I argue, surely sets the scene for a post-Brexit boost. The housing market has been running with rocks on its back for a while now, held back by heavy political gravity and uncertainty. Once the burden of Brexit is dumped (along with most of our politicians, one hopes) then my bet is that we will see an influx of eager buyers that have waited it out fearing that some experts’ opinions of ‘remain’/ ‘leave’ Armageddon may come true.
The simple fact is that these predictions of doom have not materialised, despite the best efforts of some of our lords and masters to fulfil the self-fulfilling prophecy.
Instead, such expertise has been well and truly relegated to that of dodgy pier-end ball gazing.
Our economy is sound. Money is cheap. Supply is short, and housing demand a significant cultural ambition. Sound foundations, if you will excuse the pun.
Will the housing market survive post-Brexit? I’ll bet you a dollar it will.
Henry Pryor, housing expert
At the end of last year, the governor of the Bank of England came in for a lot of stick in the press for suggesting that house prices might fall 35 per cent in the event of a no-deal Brexit. In fact, the bank was modelling, and the worst-case scenario would have seen a dramatic fall.
This was not a prediction, but part of its planning for all eventualities. The worst-case scenario would only occur, suggested the bank, if interest rates were to rise and lenders froze and borrowing became difficult. I do not see this happening, but these are uncertain times.
What has happened in the past ‘in uncertain times’ is that people sat on their hands and waited. Events such as tax changes, the Millennium Bug and general elections all tend to frighten people into doing nothing rather than something, and I expect that this is what will happen if and when we actually leave the EU. Hard though that might seem, I think that this may prove to be the easy part.
Having left, with or without a deal, we then face two years of the so-called implementation period, when we try to renegotiate the agreements we had in the EU and work out everything from the cost of importing goods to roaming agreements. I suspect this could be really painful and the uncertainties it throws up could make our struggle seem like a distraction.
The three Ds – death, debt and divorce – will continue to drive sales but few buyers will commit without something to reflect the risk they will perceive they are taking. For most, this will be a discount in the price.
I expect most buyers will be satisfied with a 5-10 per cent reduction, but there will be few prepared to pay more than 2018 prices, so it is hard to see how prices in general could rise. There will still be a market, you will be able to buy and sell, just for less than you once might have.
What impacts on your sale will impact on your purchase so, for most, this will not matter, but for now at least, the idea that house prices always rise will be a distant memory.