Trying to predict what effect the final Brexit deal may have on the UK property market in the long term may seem rather futile, given the negotiations between the UK government and the EU are ongoing.
Jeremy Duncombe, director at Legal & General Mortgage Club, acknowledges it is difficult to predict what a post-Brexit Britain will look like as the specific details are still being negotiated.
The chances of the UK leaving the EU without a deal in place is looking increasingly likely.
A report by consultancy The Guide, published in October, puts the chances of a “substantive Brexit deal on either long-term or transitional arrangements being delivered (that is, agreed, ratified and implemented) before April 2019” at just 20 per cent.
A closer look at the state of the housing market may indicate whether it will withstand a scenario in which there is no deal in place at the time the UK officially leaves the EU or indeed what might happen even if there is a deal.
Mr Duncombe believes the UK property market is in a position of strength.
“Recent figures from UK Finance show that lending is on the rise and first-time buyers are having more success of achieving their home ownership ambitions, with the number of first-time buyer mortgages up 14 per cent on 2016,” he notes.
“Looking ahead, the impact of Brexit on Britain’s housing sector will largely depend on the actual outcome of the negotiations with the EU.”
Immigration, immigration, immigration
But all this uncertainty about the terms of any deal with the EU are already being felt in some form in the property market.
Zachary Gauge, European real estate analyst at UBS Real Estate and Private Markets, explains: “There hasn’t been a huge impact to date, on the pricing side anyway. If we look at the main house price indicators, they’ve stabilised, dropped slightly but certainly there’s been no indication of a big fall in property prices, and from the sounds of it outside of London the markets are actually holding up slightly better.
“But the impression I’m getting is the market itself is a lot slower.”
With fewer transactions taking place, he supposes people are waiting to see if they can get some more clarity on some of the key outcomes of the Brexit negotiations before making any long-term purchase decisions.
He cautions that longer term though, immigration may be one of the key drivers for the residential market.
One of the main points being negotiated is a potential cap on immigration, in an effort to stem the flow of people coming into the UK.
This could be particularly acutely felt in London, where large numbers of people from around the world come to live and work, and where the financial services sector is concentrated.