10 Jan Buying a house: should I buy now or wait untill after Brexit?
It’s got to be the question on most house hunters’ lips: how will Brexit affect the property market? Industry experts are generally in agreement that political uncertainty in Britain is at the heart of the sluggish property market, alongside stamp duty and a lack of affordability.
While no one really knows, of course, we have tried to predict where the UK’s property market is headed, and whether now is the time to buy.
So, should I buy property now or wait until after Brexit?
With Brexit negotiations continuing, and the official departure date from the European Union now in sight, what does 2019 have in store for the housing market?
In many parts of Britain, particularly London and the South East, house price growth slumped in 2018, with values falling in some areas.
In Darlington, over the 2,198 sales in the area in 2018, we have seen prices remain at their 2017 levels. Average property prices for the town are £128,239 so Darlington is still a very affordable place to live. Our analysis of Rightmove data for the period October to December actually shows a 16pc increase in property transactions at the £50k to £150k price bracket.
The consensus among analysts is that political and economic uncertainty has resulted in prospective buyers ‘watching and waiting’, while a chronic shortage of properties in some areas has stopped prices from falling very steeply.
Those that are putting in offers to buy properties are often successful in negotiating money off the asking price. There is evidence that realism is “hitting home” to many sellers who are starting to appreciate that the first offer they receive could very well be their only one, however unpalatable it may be. Our experience is that the best offers normally come in the early stages of marketing when buyers are at their most motivated.
There are signs that if you can buy now, you should – in order to save some money. While some purchasers are, understandably, reluctant to commit to buying until after the ramifications of Brexit become clearer, this is likely to cause pent up demand which could lead to increases in value in 2019.
While the upper end of the market has been hit hardest by fluctuations, this is likely to be the sector which will bounce back quickest next year.
What’s going to happen to house prices?
The Royal Institution of Chartered Surveyors (RICS) last year predicted that house price growth would “grind to a halt” in 2018, due to a toxic cocktail of low levels of sales and homes on the market, as well as cautious buyers.
While house price growth this year has certainly slowed, across the market it is still climbing – the latest figures from Halifax show that house prices grew at an annual rate of 0.3pc in November. Throughout the year, growth has remained within the 0-3pc range. As mentioned, prices in Darlington have remained level whereas parts of North Yorkshire and County Durham have seen significant increases. Harrogate for example has seen 6% growth in the last 3 years.
What do the professionals think?
Next year, RICS has predicted that national house price growth will come to a “standstill”, but a supply shortage “will negate outright falls”.
Most estate agents expect modest rises in house prices in 2019 although we are cautious when looking at these predictions. The housing market is a complex beast with many markets within markets. Estate Agents Jackson-Stops believe a 1% increase is possible. They report “The punitive stamp duty levels, and continuing economic and political uncertainty, has taken its toll on the property market this year and this is likely to continue until the UK fully understands the impact of the Brexit negotiations.”
Halifax have said that despite current political upheaval, “and on the basis that it is still most likely that the UK exits the EU with a form of withdrawal agreement and transition period, we expect annual house price growth nationally to be in the range of 2pc to 4pc by the end of 2019”.
Savills said it expects prices nationwide to rise by 1.5pc in 2019, but that mainstream London property prices will fall 2pc and prime central London prices will fall 1pc.
They expect there to be a gradual rise in interest rates over the next five years that would progressively squeeze the amount households are able to borrow relative to their income, acting as a longer term drag on house price growth.
But this does not mean that there will be a crash. The legacy of the global financial crisis, particularly mortgage regulation, should protect the market from a correction.
What will happen to the rents?
Punitive tax changes and regulations have knocked the life out of Britain’s buy to let market with thousands of buy-to-let landlords exiting the market since 2016.
The buy-to-let market looks relatively stable, albeit with subdued levels of new uptake, but a lack of new rental listings has heightened demand and pushed up prices, which we expect will continue in 2019.
Will stamp duty be reformed?
The stamp duty reduction unveiled in November 2017 abolished the tax on properties worth up to £300,000 first time buyers, and where properties are more expensive, the first £300,000 is free of duty provided the property’s total price is £500,000 or less.
But further reforms are not expected. It is unlikely that any further reform to stamp duty will occur over the next 12 months but it would give the market the boost it needs during this uncertain time.
Stamp duty discourages house moving as the bill can often amount to more than £20,000 for existing homeowners.
The sharp slowdown in the housing market over the past couple of years has sent tax revenues from stamp duty tumbling. Data from HM Revenue & Customs for the third quarter of 2018 show that overall stamp duty tax receipts were 9pc lower than the same period a year earlier.
So what does it all mean?
In short, it’s a great time to buy. With average time on market increasing, there will be plenty of great property to be had especially at this time of year. Whilst we are certainly seeing sellers holding off from putting their houses on the market, there is not shortage of supply with ‘Death, Debt and Divorce’ still driving stock to the market.
The effects of Brexit won’t be fully known until the end of 2019 due to the lag in data from Land Registry and the ONS so sitting on your hands might mean you miss out on a bargain.
If you’d like a chat about the property market, why not call us today on 01325-776424.