Following negotiations that continued late into the night, it seems the Prime Minister has finally agreed an outline deal with the European Union - although there remains some uncertainty as to whether it will be supported by Parliament.
Naturally, with continued uncertainty about what our future relationship with the EU will be, the property market remains cautious. Over recent months, there have been several newspaper headlines speculating about how our exit from the EU will impact the property market.
However, we’ve looked beneath the headlines at what the commentators are saying:
Firstly, earlier in the Autumn the newspapers reported that the Governor of the Bank of England was “predicting house prices could fall by as much as 35%” – however, this simply wasn’t true. He hadn’t made a prediction, what Mark Carney had said was that the Bank had undertaken a stress test to ensure the banking system could cope in the event that property values fall by as much as 35%, and he concluded that the banks could.
In October, the Daily Mail asked the question: “Do you need to act now and buy a home before Brexit – and will the property market plummet if there’s no deal”.
The article concluded it would be a buyers’ market over the winter and for the first few months of 2019. However, the collective view was: Even if prices were to fall, history shows us that the property market tends to bounce back fairly quickly. Property should be viewed as a long-term investment so even if there is short-term volatility in prices, it will work itself out over the longer-term.
Meanwhile, later the same month the Telegraph ran the headline: “No-deal Brexit: why it could create the perfect buying opportunity for property”.
The article stated: The property market has stagnated since the referendum. Prices have remained fairly flat, while the number of transactions has fallen in 2018 compared to last year. With one commentator adding “we should expect a small drop in prices if there were to be a no-deal Brexit, but the significance of this is slightly overblown”.
What could this mean for the Private Rented Sector
Uncertainty is naturally having an impact on the property sales market. With the exception of those who need to buy, many would-be-buyers appear to be delaying making a purchase. Conversely, renting offers a great deal of certainty for those who really need to move to a new home, but don’t feel they want to buy just yet. Therefore, we predict demand for rental homes will increase - and as demand increases its likely void periods will reduce, and rents will continue to rise.
In a buyers’ market it’s unlikely landlords will choose to sell any part of their portfolio unless they absolutely must. This could see average tenancy lengths extend as tenants stay in their homes for longer.
Finally, a landlord who does want to expand their portfolio could find they are in a strong position to negotiate prices as they are presented with limited competition for properties. Additionally, the BTL mortgage market is reporting a range of competitive mortgage products are available, as the number of people taking on new mortgages has slowed.
Whatever happens in the coming months, the property market will be watching developments closely and we all hope to see a rapid return to ‘business as usual’.