What will Brexit mean for UK house prices?

On the one hand, the Bank of England has raised interest rates to their highest since 2009, yet on the other, new figures released for the year to July show house prices rising steadily, up 3.3% year on year. It's a confusing picture that reflects the overall uncertainty in the economy surrounding Brexit.

The South is suffering

Although prices are generally holding up, for now, the Financial Times notes that level of activity, especially in the South East, East and London has dropped dramatically since we voted to leave the EU. Sales are down by 20% in London and down by as much as 9% in the rest of the region, with prices only holding up because people are reluctant to reduce. But this situation can't last much longer. In London, the cracks are already starting to show, with a reduction of 0.4% in prices over the last year, and many experts predicting more reductions to come.

For the moment, while wages are finally on the rise and unemployment is dropping, there is no urgent need for most people to sell, and many potential sellers are prepared to wait it out and see. However, this could be a very dangerous game, and they may end up losing out significantly if a no-deal Brexit brings a market crash.

The spectre of 'no-deal'

Despite the Government's brave face and stoic optimism, International Trade Secretary, Liam Fox, told the BBC that he put the chances of a no-deal Brexit at 60-40, meaning we are more likely than not to part ways without an agreement in place. Governor of the Bank of England, Mark Carney, also describes the possibility as "uncomfortably high" adding that a no-deal outcome would be "highly undesirable".

With such uncertainty hanging over the markets, and promises of more interest rate rises to come, it's hardly surprising that leading economic adviser, Howard Archer, described market confidence as 'fragile'.

Sell now and be sure

As it stands, no one, not even those at the negotiating table itself, know what is going to happen come next March, so perhaps the best strategy is to sell now and take your profits. The problem is, with the market depressed, especially in the South, selling isn't always that easy.

This is where prompt, professional services such as Yes! Homebuyers, could really make sense. They offer a simple, certain and convenient service to purchase almost any property, in any condition, with an offer in 24hours and a sale in as little as a week. You may get less for your property than you would on the open market, but if the open market is not buying, then that difference is academic. If you hold on to your home in the hope of getting the full price, you risk losing out if the market crashes when the Brexit door slams shut.

"Even if you do secure a sale before Brexit, your buyer's mortgage company could still down-value your home," explains Yes! Homebuyers Director, Kelvin Elliott. "Add in the cost of legal fees, estate agent fees and all the repairs and renovations required to sell on the open market, our typical offer of 80% is a better deal than you think. The difference may be a small price to pay for certainty in an uncertain world."

So will there be a price crash?

There is a wide range of opinions as to exactly what effect Brexit, in its various possible forms, will have on the housing market. Mortgage providers and their surveyors are certainly being very cautious, with a sharp rise in 'down-valuations' as they look to reduce their exposure in the event of a crash. More and more buyers are finding that they can't borrow what they hoped against their chosen property, and this can only serve to drive down property prices.

Many experts are predicting that a no-deal Brexit, or a hard Brexit, will inevitably reduce opportunities, in the short term at very least, with trade, growth and ultimately wages, suffering as a result. The less we have to spend, and the lower our optimism for any future wage rises, the lower house prices will fall.

Conversely, there are some who suggest that a soft and orderly Brexit could also harm house prices. With all the uncertainty removed, the Bank of England would no longer need to keep interest rates low to stimulate the economy, and rising rates would inevitably hurt the market.

Hold on to your hats

For all the settled weather we've been enjoying this summer, you can be certain of stormy times ahead, as the Government attempts to negotiate the turbulent waters between us and the Brexit exit door. You'll certainly want to hold on to your hats, but whether you want to risk holding on to your property too is another matter altogether.