Following years of Brexit uncertainty, the UK left the EU at the end of January 2020 but now that we are firmly in the transition period, what does this mean for the country’s property market?
The transition period will officially last until the end of 2020. Trade negotiations between the UK and EU will be taking place over the next few months. Therefore, we won’t see the true effect of Brexit on the UK economy until then.
Despite ongoing discussions, we’re able to look at previous sales performance to see what Brexit might mean for house prices.
Many areas saw a slowdown in property sales during 2019. However, December of last year experienced the highest number of property transactions since the Brexit referendum. Sales during this month were up almost 7% on December 2018. Many experts put this increased confidence down to the Conservative party majority win in the 2020 general election.
Lower Interest Rates
A vote by the Monetary Policy Committee to cut the base rate means expected to remain low are interest rates. This will create tough decisions for homeowners wondering whether to move home or remortgage.
Short-Term Increase in Property Prices
As we head further into the Brexit transition period, property experts are predicting good things for the UK’s housing market. Kate Faulkner of propertychecklists.co.uk predicts “a Brexit bounce in activity at the start of 2020” resulting in “more people putting properties up for sale and more buyers coming into the market.
“In some areas this may result in a short-term rise in prices as people compete for quality properties in good locations, which are likely to remain in short supply.”
Positive Expectations for Buy-to-Let Landlords
Chris Norris, director of policy and practice at the National Landlords Association (NLA) expects established buy-to-let landlord to do well in 2020, but that those heavily reliant on finance may find the uncertainty more difficult.
Many market forecasts are dependent on the outcome of the transition period. Mark Hayward, CEO of NAEA Propertymark says that ongoing uncertainty is preventing much activity in the housing market. He stated, “Once there’s clarity on [whether we’ll end up with a trade deal], we hope there will be a degree of certainty which may trigger a flurry of activity.”
On the other hand, a no-deal Brexit could cause havoc for the housing market. If no agreement is reached from the ongoing trade discussions, the Office for Budget Responsibility has predicted a 10% drop in house prices by mid-2021. Accountants KPMG forecast a larger fall of 20% as a worst-case scenario.