With so much uncertainty surrounding the country at the moment, everyone is wondering just how Brexit will impact the property market. But the answers from all quarters seem unclear.
The UK’s housing market appeared little affected by the 2016 vote to leave the EU, despite a pause after the surprise referendum result as householders took stock. But as the moment of departure in March 2019 approaches, estate agents say the unknowns surrounding Brexit are weighing on the property market.
Surveyors said in September that the outlook for prices in three and 12 months’ time was the lowest since June 2016, with Brexit the key concern among buyers, according to the Royal Institution of Chartered Surveyors’ monthly survey. Concern was concentrated in the capital.
A warning last month by Mark Carney, governor of the Bank of England, that a disruptive no-deal Brexit could cut 35 per cent off house prices added to the market jitters, Rics said. Mr Carney’s warning represented an extreme scenario, and the ultimate effects of Brexit on house prices and mortgages will depend on the details of any deal and their repercussions for the economy.
But in the meantime, some parts of the market have become highly sensitive to developments in the Brexit process: after Prime Minister Theresa May’s humiliation on Brexit at the Salzburg EU summit in September, “we had three deals fall out of bed”, says Jonathan Harris of the London-based mortgage brokers Anderson Harris.
Most projections indicate that Brexit will weigh on economic growth; UBS analysts said a “soft” Brexit would cumulatively cut about 6.9 per cent from gross domestic product over five years, while a “hard” Brexit would lead to a 10 per cent drop. Most of the total costs would occur in the first 12 to 18 months after departure, they argued, as trade barriers were put up and businesses relocated. The Bank of England has said its stress tests indicated banks could support the economy through a “disorderly Brexit”, since they had passed tests covering a scenario more severe than the 2008 financial crisis.