Brexit: House prices to be ‘negatively impacted’ by ‘perfect storm’ of no deal uncertainty
BREXIT will see house prices "negatively impacted" as uncertainty continues over a deal or no deal scenario. But according to one expert, crashing out of Europe without an agreement could have an adverse effect on the UK's property market.
By MYRIAM TOUA
Prime Minister Boris Johnson, much to the dismay of many economists and forecasters, warned a no deal scenario was “very likely”, adding that “time was short” to agree on a divorce deal. European Commission President Ursula von der Leyen reiterated Mr Johnson’s words, saying it would be “very challenging” to bridge the “big differences” between Britain and the bloc. The biggest issues that need to be ironed out remain access to the UK’s fishing waters and the “level playing ground” in business competition.
A No Deal scenario will likely have unprecedented economic effects for the UK, especially in the mid of a global pandemic which has already wreaked financial havoc on the country.
With the stamp duty holiday coming to an end on March 31 and continuing hesitancy to buy a house during these uncertain times, no deal will almost certainly impact the housing market as it storms through the economy.
Speaking to Express.co.uk, head of specialist mortgages at Pure Property Finance, Chris Evans said: “In my opinion, a no deal Brexit along with the end of stamp duty relief in March will see house prices impacted quite negatively.
“It’s difficult to look at the impact of no deal by itself now with Covid on the scene.
Brexit: House prices to be ‘negatively impacted’ by ‘perfect storm’ of no deal uncertainty (Image: Getty)
Brexit: Houses for sale
Brexit: The market will likely be impacted by a no deal in 2021 (Image: Getty)
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“It has become a perfect storm of uncertainty, and it’s generally uncertainty that fuels negative economic performance.”
The housing market hangs on a number of delicate factors, including people’s incomes and wages and the social situation in the country.
Managing Director of Open Property Group Jason Harris-Cohen told Express.co.uk: “At present, we have a magnitude of economic and political uncertainty, however until now the housing market has defied the gloom.
“A no deal Brexit will create further economic problems and significantly affect GDP (Gross Domestic Product).
Brexit: People will be more reluctant to buy during the uncertainty (Image: Getty)
Brexit: Brexit timeline (Image: Getty)
“There is also the fear of the unknown, which will have a negative impact on consumer confidence, and in turn, spending and investment in the UK.”
Thousands of people have found themselves out of a job this year, which according to Mr Evans, will add to the reluctancy and uncertainty surrounding the property market at the moment.
Mr Evans said: “While job security is going to be a major challenge all across the UK, especially when furlough comes to an end in April, people will quite likely be reluctant to want to move home while worrying about their jobs.
“So, the demand for new properties will take a hit and, as with any product, a lack of demand will mean prices will inevitably fall.”
Brexit: The lack of demand is expected to make house prices fall (Image: Getty)
What does no deal Brexit mean for property?
While a negative impact on the market is a certainty, the severity of the fallout cannot be accurately forecast as the full effect of Covid on the economy is yet to be properly digested.
But when you add the impact of a no-deal Brexit into the mix of a global pandemic, it certainly will not be a buyer’s market for a while.
In terms of the London housing market, which has been turned upside down amid office workers doing their jobs indoors, Mr Harris-Cohen says he doesn’t think it’s good news for the capital.
He explained: “I believe that the market in London and the south east will contract, however I think the fundamentals for Northern properties are resilient as yields are strong and there is an emphasis by MPs to support the economic growth of the Northern powerhouse.”
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However, it could not all spell bad news as Mr Evans thinks the market has been through the worst of it already.
He concluded: “In my opinion, Covid will be a bigger detriment to house prices than a no deal Brexit will be.
“All this being said, providing a vaccine rollout is successful and efficient, I’d like to think the housing market will recover in good time as confidence comes back into the market.
“I think 2021 will be challenging, but I am hopeful that by the end of the year things will be back on the up.”