For a long time there has been uncertainty around the property market in the UK due to Brexit and the general election looming. Now the general election is complete and Boris Johnson secured a large victory for the Tory party, there is at least a Brexit deal on the table along with more security. But how will this affect the property market?
Houses on the market and prices
Carter Jonas, an estate agents, have found there have been fewer homes up for sale around uncertain times. In February 2019, the number of properties on the market dropped as Theresa May’s Brexit deal caused her to experience the largest defeat in parliament of any prime minister in Britain, and in November 2019 there was a fall following the announcement of the general election. Also in November 2019, there were 25% more offers on properties than in the previous year. This means that demand was still there, but people didn’t want to sell. We can see that politics has a high influence on the number of people putting their homes on the market to sell.
Now that there is less uncertainty, the back-log of sellers are expected to step up and put their homes on the market, and buyers are predicted to increase too. The property market should be liquid again and may cause house prices to increase.
Could Brexit boost the market
In the past, decisions relating to Brexit have consistently affected the number of property transactions. Once Brexit is over, it’s thought that we may see a drop in house prices due to affordability. Even though sellers who have been holding out may list their properties on the market, buyers may not have enough money to purchase them. This means that there could be more houses on the market than are selling, reducing prices.
The Conservatives are planning to introduce mortgages offering fixed rates for long periods of time. This should heavily reduce the cost of deposits for first-time buyers and help affordability. However it’s thought that the uptake of these mortgages will be limited by expected exit fees.
How overseas buyers may be affected
Boris Johnson leading the Tory party to power is likely to result in property buyers from abroad purchasing more homes who were previously put off by the uncertainty. Foreign buyers often target new builds, so it could be a boost for developers.
However, if the Tories bring in their promised 3% surcharge in Stamp Duty for overseas buyers, it may put some off. Despite this, the surcharge is minimal compared to the percentage some countries charge. For example, Singapore charges a 20% surcharge in Stamp Duty for foreign property investors.
It’s expected that before this surcharge takes effect, there will be a rush of foreign buyers trying to grab deals, but in the long term we could see a drop in foreign investment.
What do you think may happen to the property market in the UK now that the Conservatives have taken a majority with Brexit upcoming? Let us know in the comments below.