As an RICS Registered Valuer, it is my job to provide clients with a rational unbiased opinion of the value of an asset.
What this allows me to do is have the first-hand view on how the market has moved over a period of time. For example, I may value 3 similar properties on the same road over the course of 3 years and be able to see how the values differ during the 3-year period.
I will, therefore, be writing a blog regarding the impact of Brexit on the Residential Property Market through facts and my own perspective of things.
What exactly is Brexit?
Brexit is literally the shorthand word for “Britain Exit”, which is a reflection of Britain’s intention to leave the European Union, which was determined through a UK wide referendum in 2016.
What this does is now affect UK citizens living in the EU and EU citizens living in the UK, therefore placing their ability to reside in the said countries, up for question.
In addition, Brexit affects the way the UK can trade with EU countries, questions, whether a certain business can operate in the UK and most importantly affects the confidence of house buyers and sellers in the UK, due to the uncertainty of “What, would it be like when we leave?”.
How has Brexit affected the UK Residential Property Market?
With the UK leaving the EU, this will throw off a number of European Investors dramatically, as they will be in a position whereby, they may not be able to reside within the UK or be restrained in terms of how much investment they can input into the UK following our withdrawal from the EU.
Most importantly, the level of uncertainty amongst the UK and foreign buyers has caused a huge slump in the level of demand for properties in the UK. In March 2019, the New Buyer Enquiries series returned a negative 27% net percentage of enquires made into purchasing properties in the UK.
That, unfortunately, was the 8th month in a row where there has been a negative reading.
This reflects the severity of the impact Brexit has placed on the UK housing market. However, with the reduced level of buyers during this uncertain period, this has forced the hand of house seller to simply reduce their asking prices in order to trigger responses and increases in enquiries and prospective buyers.
To put this into perspective, I recently valued a flat which was part of large-scale luxury development, that was placed on the market at the end of 2017. One of the flats that I valued, sold in April 2019 for 35% less than its asking price in 2017. Most importantly, the reduction in value was reflected through the general decline in values in that particular area over the course of 12 – 18 months.
Staying on the impact this has had on the London market, in 2018 there was a record low on the level of transactions in London in over a decade, with a nationwide growth being at its slowest, 0.1% year on year, since Brexit was declared.
In this particular year, it is important to note that the affordability of properties in the market will not be as important as buyer confidence. However, such uncertainty has now placed a positive impact on interest rates, keeping them low and allowing homeowners to re-mortgage their properties with ease.
In my overall opinion, the uncertainty amongst UK and EU investors will continue to dictate the level of transactions, house prices and housebuilders across the board.
If you are looking to purchase a property or considering selling, feel free to give us a call and we will be more than happy to discuss your situation in more depth!