The chief executive of Haart, Paul Smith, is warning that a No Deal exit from the EU could leave Britain with “a slower market, with fewer transactions taking place as both buyers and sellers hit the brakes.”
Smith says that although transactions have remained largely static in number over the past four years - including two and a half years since the EU Referendum - prices have remained resilient, helped partly by government assistance to first time buyers in the form of stamp duty relief.
But he warns: “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.”
Smith says that maximum disruption could be caused by any further delay to the Brexit process, leading to additional uncertainty of the kind currently gripping parts of the market. He paints four possible scenarios:
Scenario 1 – Leave the EU with a good deal: “We could expect a super-charged property market in 2019 if a positive Brexit deal is agreed” says Smith, who predicts a 10 per cent boost in transactions in the second half of 2019.
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” admits Smith. But he says this is unlikely to produce a price crash - although he accepts a likely five per cent price drop.
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” he says, anticipating a two per cent reduction in homes on sale “and potentially house price dips.”
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 ... 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 per cent, further stunting any opportunity of economic prosperity at a time when we need it most” Smith forecasts.
Meanwhile a less publicised story which broke yesterday came from the Paragon Banking Group which said it was assessing property values with a view to reducing any problems the mortgage market might suffer as a result of Brexit.
The lender - famous particularly for its buy to let mortgage products - revealed it had employed an in-house property team to look after about two-thirds of valuations and conduct “validation work” on property valuations by third-party surveyors.
“The impact of a potential economic downturn, whether as a result of the Brexit process or otherwise, remains an area of focus across all lending markets” the lender warned in a trading statement.