Buyer registrations have gone up 37%, but Brexit uncertainty is still holding back transaction levels, according to Haart.
Paul Smith, CEO of haart, the UK’s largest independent estate agent, comments:
“Despite negative Brexit rhetoric from Westminster and the industry, the property market remained resilient in October. Although prices dipped slightly (-1.4% on the month), it is very promising to see transactions across our entire network increase by 2.4% on the month and the year (9.7%), showing that despite uncertainty, buyers and sellers are still motivated to transact.
“Twenty-nine months after committing to leave the EU we finally have a Brexit deal on the table, however political infighting is at its highest level and a number of scenarios could play out which would affect the property market in different ways. Government data shows that while total transactions have risen by 53% since 2009, over the last four years, they have largely remained stable, sitting at around 1.1m annually despite the referendum being called in 2016.
“I believe that even if we encountered a hard Brexit, we would be very unlikely to see the significant price falls encountered during the credit crunch. Greater regulation in the banking and mortgage market, a shortage of supply and Government support which underpins the first time buyer market means that a far more likely outcome would be a reduction in transaction volumes. While this uncertainty would result in fewer homes coming to market, demand will continue to outstrip supply as at the end of the day people will always need to move home for various reasons, which will ensure that prices continue to hold-up regardless of the outcome.
“The next couple of weeks will prove interesting. Below are my predictions of what could happen to the UK’s housing market following various Brexit scenarios – in my opinion the greatest threat is a delay to Brexit because of political posturing.”
Scenario 1 – Leave the EU with a good deal: “Although the level of activity our branches are experiencing on the ground continues to defy Brexit doom-mongers’ expectations, we could expect a super-charged property market in 2019 if a positive Brexit deal is agreed. In October, the number of people registering to buy a home was up 37% on the year, however many sellers are holding off as they wait for greater clarity from the Government. With a strong deal in place, confidence would fuel the market upwards, turning instructions into transactions. We would expect an uplift in transactions of 10% to take place in the second half of 2019, with an increase in buyer demand leading to slight price rises thereafter.
Scenario 2 – Leave the EU with no deal: “A no deal Brexit would likely result in a short term blow for the property market, at what would normally be a peak time of the year for activity. The most likely impact would be a slower market, with fewer transactions taking place as both buyers and sellers hit the brakes on their plans. However, I don’t foresee a large-scale property market crash and instead anticipate that in this scenario house prices are unlikely to fall by more than 5% due to a shortage of homes on the market propping up overall prices. It is also extremely likely that in the event of the UK leaving the EU without a deal, there will be a fiscal stimulus in the form of a stamp duty holiday, and a drop in the Bank of England base rate to support borrowers.
Scenario 3 – Challenge to Theresa May’s leadership: “Political stability is crucial for a thriving housing market – and for this we need a stable government. If a leadership bid was triggered we would risk creating further uncertainty in the market. In this instance we’d undoubtedly see more homeowners holding off listing their homes, resulting in a drop in transactions of roughly 2% and potentially house price dips. Unsurprisingly, I would expect London to be hit the hardest.
Scenario 4 – Extended Brexit negotiation period: “Whilst a ‘No Deal’ scenario would potentially be quite damaging, an extended period of Brexit negotiations beyond the set date of March 2019 could prove just as detrimental. Our latest data shows that house prices across England and Wales have fallen by 0.8% on the year, highlighting the adverse effect uncertainty continues to have on the housing market. Extending negotiations would only encourage further uncertainty, resulting in a delay among buyers and sellers. Should this continue throughout 2019, we could expect transaction volumes to dip by as much as 20%, further stunting any opportunity of economic prosperity at a time when we need it most.”