Regardless of your views on Brexit, there’s no arguing that it has created a great deal of uncertainty. Sam Funnell from Fine & Country Rugby discusses what this means for the property market.
As the final Brexit decision edges closer, the impact on the property market has left potential sellers and buyers in a difficult position because of the uncertain outcome. On the one hand, there is a wait and see attitude, particularly with buyers thinking that prices may well reduce. For sellers, the question is if the market slows down is selling now the better option?
There are varying opinions on the likely effect, however, many predictions prior to the vote did not play out as expected. No-one has a crystal ball and while there was a slowing in the market, the year end statistics showed continual growth, albeit in more modest terms.
It is difficult to define exactly what the effect has been since the Brexit vote, as the property market reacts to a wide variety of external pressures. The weakening of demand for prime locations in London occurred before the referendum and was more to do with affordability. Brexit may have increased the downward pressure, however, the rate of decline has certainly slowed. This was balanced by the weakening of the currency, making properties more affordable for overseas investors.
The most important factor in the property market remains supply and demand. The effect of interest rates and salaries also play an important part. While there is a decline in properties on the market, those that are priced appropriately continue to sell. This results in a drop in the volume of sales, rather than price.
The property market is much slower to react to external pressure than the share market. This is in part because the value of a property only becomes important when you sell. Given that most buyers will own a property for 10 to 12 years, even if the market declines, in the immediate future there is plenty of time for any loss to be recouped.
For buyers who are looking to make a profit, the decision is more complex as interest rate rises, overvaluing and Stamp Duty all impact on the ability to make a quick profit. For those making an emotional purchase to buy a home, the focus is not on short-term appreciation. A buyer finding a property they want to live in that ticks all the boxes for location and other requirements would be wise to buy now, rather than risk losing their dream home in a market with fewer property options.
Despite the uncertainty, history shows the continuing demand for houses and lack of supply will ensure the property market will always rebound.
For advice on selling or buying property, please contact Fine & Country Rugby on 01788 820062 or visit www.fineandcountry.com