Whether you're a staunch Remainer or avid Brexiteer, there's no denying that the uncertainty around when the UK will leave the EU, and the terms under which it may happen are causing property market jitters.
Original article published by Which?
The upcoming general election - scheduled for 12 December is doing nothing to calm nerves.
With each of the major political parties taking a different line on Brexit, it's impossible to predict the potential knock-on effect for property prices and the sector as a whole in 2020 - but looking backwards at what's happened so far can give some clues.
Which? have analysed market activity before and since the Brexit referendum and spoken to experts from the estate agency, building, mortgage and buy-to-let sectors to bring you the insider's guide to what could happen over the coming months.
What could a base rate cut mean for the property market?
The economic uncertainty caused by Brexit has undoubtedly affected the market, with house prices falling in some areas and fewer sales having taken place so far this year compared to the same time last year.
To add to the confusion, a base rate cut is looking more likely following the most recent vote by the Monetary Policy Committee, in which two out of the nine members voted for a decrease.
Question marks over what this could mean for mortgage rates are making decisions even tougher for those weighing up whether to move house or remortgage.
What will a no-deal Brexit mean for house prices?
While many MPs are strongly opposed to it, a no-deal Brexit remains the default position if an agreement cannot be reached between the UK and EU.
Many business leaders and financial experts have expressed concerns about the potential consequences of leaving without a deal.
Accountancy firm KPMG has predicted that house prices would fall by around 6% following a no-deal Brexit, but that they could drop by as much as 20% in a worst-case scenario.
In July, the Office for Budget Responsibility said that a no-deal Brexit could lead to house prices falling by almost 10% by mid-2021.
Looking further back, Bank ofEngland governor Mark Carney said in February that UK growth would be 'guaranteed' to fall in the event of a no-deal Brexit.
What's happened to house prices since the Brexit vote?
House prices did stagnate for a while following the referendum in June 2016. However, it was fairly normal for that time of year: prices generally grow in spring and plateau over the following few months, a pattern that was repeated in 2017.
But, with Brexit looming ever closer, house prices fell much more sharply than usual after last summer.
The good news if you're a homeowner is that prices have generally recovered over the last few months, with September 2019 (£234,370) only taking a slight dip against August, which saw the highest average house price on our chart at £234,853.
As you can see in the graph below, it's normal for prices to peak in August before falling slightly from September, so this indicates a return to a more usual seasonal pattern.
Average UK House Prices (£)
Source: UK House Price Index, released 13 November 2019
Are UK house prices falling?
Looking at a year-on-year house price change over the longer term can be another useful way of understanding what the market's doing.
The chart below shows what the annual rate of change has been each June since 2014, plus September 2019 (the most recent data available at the time of publishing):
Year-on-Year House Price Change Before and After the UK Referendum (%)
Source: UK House Price Index, released 13th November 2019
As you can see, the rate of house price growth plummeted in the year after the referendum everywhere in the UK except Scotland, which remained flat.
Two years on, in June 2018, year-on-year price growth had improved in every UK nation except England.
By June 2019, with Brexit supposedly fast approaching, the rate of growth had slowed across the board to a UK average of 1.01%. However, by September this had picked up slightly to 1.25% despite the fact that, at that point, Boris Johnson was promising that Brexit would take place on 31 October.
This shows how difficult it is to draw a direct link between Brexit and house price activity: it's impossible to accurately state the extent to which Brexit has influenced the figures. And some argue that the house-price slowdown is simply a long-overdue market correction, which could help the thousands of potential first-time buyers who've been priced out in recent years.
Transaction volumes since the referendum
Another way of judging the health of the housing market is to look at transaction volumes, meaning the number of property sales in any given month. A lower number of sales can indicate market uncertainty, which is often triggered by events such as an election or referendum.
Interestingly, the referendum itself didn't seem to have much impact on transaction figures.
Earlier this year, however, transactions were quite sharply down compared to the same months in 2018. But activity has improved recently, with September showing a slight uptick in sales (101,740) compared to 2018 (99,420).
It remains to be seen whether transactions will decrease again in the run-up to the general election - data wasn't yet available at the time of publishing this article.
(The spike you can see in the graph below was caused by investors rushing in to complete their purchases before the 3% buy-to-let stamp duty surcharge came into force in April 2016).
Housing Transactions Before and After the EU Referendum
Source: HMRC UK, Property Transactions Statistics, released 22 October 2019
What's the pre-Brexit market like for sellers?
Two commonly used measures of how the market is performing for sellers are stock per branch - which is the average number of properties on each estate agency's books - and time to sell.
The chart below shows that it's taken people longer to sell their homes recently than in previous years. In January, the average time for a property to go under offer shot up to 77 days, the highest on record.
It has since fallen, dropping to 62 days in June, and remaining at that level ever since, but that's still much slower than in previous years. Many commentators believe this is due to nervousness around buying a house in the run-up to the election and a potential Brexit.
Stock per branch is only slightly up year-on-year, from 52 in September 2018 to 54 in September 2019.
This could be indicative of seller frustration, with a July 2019 report from data agency TwentyCi pointing to 895,000 homes having been withdrawn from the market over the previous year.
Stock Per Agency and Time to Sell
Source: Rightmove House Price Index, released 21 October 2019
Brexit house price predictions: What do the experts think?
The chart above shows us what's already happened, but what lies ahead? Which? spoke to a range of industry experts to find out what they believe the future holds for the UK property market, both before Brexit and beyond. Here's what they said:
The mortgage broker: "Don't just jump into a fixed rate"
David Blake, Which? mortgage expert, says: "The political situation may be in turmoil but it's important that buyers and homeowners don't panic or make any rash decisions.
"I'm sure many people are waiting until we know more about whether the UK will leave the EU with a deal, but it's tough putting your life on hold for an unknown.
"Recent price drops in some regions mean that it's becoming more of a buyer's market, so you might be able to get a good deal. Besides, buying a property should generally be regarded as a long-term investment and, even if there is a short-term price drop, house prices will probably stabilise in the future.
"Mortgage rates are incredibly low right now and many will want to fix into a low rate to give themselves security as we move into a period of uncertainty. But don't just jump into a fixed rate without considering the alternatives - there are plenty of flexible products that would leave your options to remortgage open if rates did start to change.
"Brexit is still a complete unknown, and while a professional mortgage advisor won't have all the answers, they will be able to explain your mortgage options to help you navigate this period of uncertainty."
The property pundit: "If you want to live there long term, buy now"
Kate Faulkner, housing expert and founder of Propertychecklist.co.uk, says: "We've definitely seen a stagnation in the market over the last year in areas such as London and the South and East (which has all overheated), and this has spread to other areas over the last few months.
"Buyers have held back in the hope that prices will fall, but as this hasn't materialised across the board, they're starting to come back into the market.
"The difficulty now is lack of properties for sale, as people are worried they won't get a good price for their property. This has led to a flurry of activity in some areas during the summer, but I think this will slow down due to the uncertainty of "what happens next?".
"Personally, I don't think buyers should be put off by fears of a house price crash as long as they mitigate the risks. If you bought a property now, even if it did drop in value in the short term, the market would have corrected itself by the time you wanted to move (assuming you stayed there for at least five years).
"However, if you're considering buying somewhere for the short term it's more complicated. Transactions are likely to stagnate towards the end of the year unless we see some clarity over Brexit.
"In terms of buy-to-let, demand from landlords has already reduced and many have sold up. We are now seeing rent rises as a result - particularly since the tenant fee ban - so sadly this has impacted tenants more than agents or landlords.
"With property deals available and rents on the rise, now isn't a bad time to be a landlord as long as you really understand your objectives and whether the deal stacks up both now and in the long run."
The estate agent: Buyers and sellers are putting their plans on hold"
Mark Hayward, chief executive, NAEA Propertymark, says: "Brexit is undoubtedly causing uncertainty in the housing market, which in turn affects sentiment and decision-making, and we're seeing both buyers and sellers put their plans on hold as a result.
"Recent research from accountancy firm KPMG suggests UK house prices could fall my more than 5% if there's a no-deal Brexit, which won't help consumer confidence.
"Once the current political impasse is resolved and it's clear how and when we'll be leaving the EU, we hope there will be a degree of certainty which may trigger a flurry of activity. We hope this certainty is provided sooner rather than later."
The buy-to-let expert: "Portfolio landlords will fare well"
Chris Norris, director of policy and practice at the National Landlords Association (NLA), says: "The issues troubling most landlords are the status of non-UK, and in particular EU, citizens, given their responsibilities to police the government's Right to Rent policy, as well as the overall impact that divergence [Brexit] will have on the stability of the housing market.
"It is still too early to predict what impact Brexit will have on property values. A weakening of the appeal of UK investment could drive prices down or a lack of certainty could drive up interest in the relative stability of bricks and mortar.
"Likewise, while news of a general election on 12 December might be music to the ears of those that want Brexit done and dusted, the uncertainty is not yet over. And aside from Brexit, landlords are concerned about what the next government's plans will be for the private rented sector more broadly. All factors together have caused landlord confidence to fall to an all-time low.
"On a day-to-day level, changes to immigration policy could reduce demand from those coming to the UK, or drive up interest from those taking advantage of new arrangements with states outside the EU.
"It is likely that landlords with established, well-capitalised portfolios will fare reasonably well. However, those heavily reliant on finance may find uncertain conditions more troubling."
The housebuilder: "We need skilled labour from abroad"
Stewart Baseley, executive chairman of the Home Builders Federation, says: "Unlike the wider housing market, where transactions have dropped considerably from the historical norm, the new-build market has remained relatively strong in recent months - although there are some challenges at certain parts of the market and areas of the country.
"The confirmation in the Budget of an extension to the Help to Buy Scheme was welcome. The scheme is ensuring demand for new-build homes remains strong [and]... the certainty of demand is enabling builders to plan ahead to increase output in the coming years, as is demonstrated by the record high number of planning permissions being granted.
"To enable increases to be delivered the industry needs certainty about future labour supply. It is essential that, post-Brexit, the industry continues to be able to access skilled labour from abroad if housing targets are to be met."