Is the uncertainty around Brexit scaring homebuyers?

Research carried out by the Royal institution of Chartered Surveyors (RICS) shows that the uncertainty of Brexit is showing real signs that it is taking its toll on UK property investment.

Experts say that prices are beginning to fall, buyers are being more cautious, and deals are taking longer to complete. The downward pressure on prices in London appears to be spreading beyond the capital.

The time it is taking to complete is now up to 19 weeks, the longest duration since the RICS began collecting data. Surveyors across London that were part of the study were almost unanimous in blaming Brexit.

A surveyor at Knight Frank, Simon Barker, highlights the significance of Brexit on the property market, saying that “a no-deal Brexit will be a disaster for the property market”. This is supported by Michael Brooker, a surveyor and estate agent in East Sussex, saying that “Brexit is really depressing the sales market”.

Measurements by the RICS highlight that the number of enquiries continue to fall, from -9% to -11% over the last two months.

The number of appraisal enquiries is another indicator at the slumped interest in property investment. The RICS highlights that there is a net balance sitting at -20%. This would suggest that there is unlikely to be any sales in the near future.

Halifax compound these findings, having revealed that house prices have continued to plummet at the fastest rate for six months. In addition, the number of homes up for sale have fallen to a 10-year low, with average house prices dropping 1.4% to £225,995 in the past month.

The North holds strong

However, the effects of Brexit are having less impact in the North. RICS say that “house prices continue to rise firmly across much of the UK”. Major cities include Manchester and Liverpool, though Northern Ireland and Scotland are posting strong growth.

Northern Ireland is currently maintaining strength with its diverse property market, which could be seen as surprising with the border to the Republic of Ireland remaining a challenging issue with regards to Brexit. Kirby O´Connor of Belfast’s estate agents GOC says that “the market has continued to be strong despite the dreaded word Brexit”.

The rental market is seeing a rise, with a fourth successive month of increased demand, according to RICS. The result of this is that rents are likely to see an increase of roughly 2%, with this figure rising to approximately 3.5% over the next five years. Promising signs for any landlord looking to invest in property, supporting our analysis in this recent HMO property guide. This could see opportunity for investors to target this increasing market with the promise of higher long-term yields.

It may be difficult to justify investing in UK property at the moment with the results of Brexit fast approaching. Many will be holding until things become clear over the next few days. However, now could prove to be a good time to take advantage of lower property prices and the increase in rental demand.

Kindly shared by FJP Investment