Brexit and the property market 2019

As with all things related to Brexit, there are wildly differing opinions, depending on your view, your depth of knowledge and crucially, what sort of deal – if any – will happen. Thus, any predictions can really only be based on gut feeling.

It is generally thought to be highly unlikely that the housing market will crash, though some high profile politicians have suggested potentially huge value drops in the event of a no-deal scenario. And indeed, in some areas of the country, the uncertainty is already leading to price drops.

So, who could changing property prices affect, and how?

First-time buyers

It is worth bearing in mind that a drop in the housing market isn’t a bad thing for everyone – in particular, first time buyers who may find a hypothetical 5, 10 or 15% drop could open up the opportunity for them to get on the housing ladder.

That said, this must be balanced with the potential effect on the economy and jobs which could prevent many from being in the position to take advantage of this.

Property and home owners

However, if you already own a property, and you don’t need to move home, or refinance, then any change in house prices, is going to be largely academic to you.

As has happened when property prices have fallen in the past, many would be advising to simply ‘ride it out’ as the market always picks up eventually.

Those refinancing

If you need to refinance, then the value of your home is much more significant.

If refinancing, the equity in your property can make a big difference to the interest rate and product you could be offered, as one of the determining factors in mortgage rate setting is loan to value – in other words, how much you borrow compared to the value of the property. The higher the percentage you borrow, the higher the interest rate you will be charged, generally speaking.

Those moving

If you are moving home, then the equity in your property is likely to provide the lion’s share of the deposit for your new home. So, a drop in property prices – if this were to happen – would be relative; as if you are buying a more expensive property in the same area, its price is likely to have dropped further in cash terms than your current property. However, there are many different variations, depending very much on area.

General consensus

At present, pundits are not predicting a rise in house prices as a result of Brexit. Though again nothing is certain in these unusual times.

Do you have any questions or concerns?

If you would like further clarification on how you may or may not be affected by Brexit, please don’t hesitate to give us a call. We are answering questions on the subject on a daily basis and whilst we don’t have a crystal ball, we have extensive experience in the housing market and can offer sound mortgage advice.

January 2019