The ongoing political uncertainty is driving down house prices and a bad Brexit outcome could accelerate this trend, depressing prices by up to 5% and reducing transactions by 20%.
That is the prediction of Haart CEO Paul Smith, who also says almost every scenario except an unspecified ‘good deal’ with the EU would is likely to be damaging for the housing market.
This includes leaving the EU without a deal, a challenge to Theresa May’s leadership or an extension to the negotiation period. The worst case scenario outlined by Paul is the last one in which Brexit negotiations continue past April next year. If this was to happen, he claims, transactions could drop by 20%.
Surprisingly, Paul says leaving the EU without a deal would see the least damage done to the property market. This would include prices dropping by only 5% on average across England, helped by a likely raft of measures to stimulate the economy including a stamp duty holiday and lower interest rates.
“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,” says Paul.
The damage already being done to the housing market by political uncertainty is clear in Haart’s own house price data.
It reveals that transactions are down by 12% in the South East year-on-year, by 20% in the North and West, by 19% in the South West and by 11.3% in the East of England.
“Our latest data shows that house prices across England and Wales have fallen by 0.8% on the year, highlighting the adverse effect uncertainty continues to have on the housing market,” he says.