by HOWARD ROBIN
BREXIT Britain may be divided but whether you voted leave or remain, it seems there are some things that we can all agree on.
With just weeks to go to the UK's departure date from Europe, the uncertainty surrounding the out-come of negotiations is having a marked effect on the property market.
Last September, Mark Carney, the governor of the Bank of England, issued a stark warning that a no-deal Brexit could cause house prices to tumble by 35 per cent. The current impasse in Westminster has done little to calm the jitters.
As the share prices of some of the UK’s biggest house builders have increasingly come under pressure and we are faced with a multitude of scenarios including a deal, no deal or a people's vote, there are a number of pertinent questions that anyone interested in the property market are asking.
Is a property crash coming or are we just in for a minor correction post Brexit? What is going to happen to house prices? Is now a good time to buy or sell, or should people wait until there is more certainty?
There are three main causes of a property crash. First, house prices will fall when the supply of money to buy them is cut oft Second, a property market will slow down when the cost of buying or renting becomes too high. Third, the market will slow down when, for one reason or another, demand weakens.
According to property analysts, it was a shortage of credit, combined with the hike in interest rates, that set off the crash of 2007. As a result, the market went into panic as would-be home owners and cur-rent owners found it harder and harder to afford payments, making it impossible for people to move.
As the government continues to negotiate the UK's departure from Europe, what has been the Brexit effect and how will things play out as we inch closer and closer towards March 29?
In January, the Royal Institution of Chartered Surveyors (RICS) said house prices were going down more quickly than they had for six years. and that outlook was weaker than it had been for around 20 years due to uncertainty over Brexit.
Your Move. Britain's largest estate agent. reported a rise of 0.3 per cent in house prices for England and Wales for December, which means they are dropping in real terms when inflation is taken into account. Uncertainty over Brexit was cited for the flat figures.
However, it is not all doom and gloom. The UK market, as a whole, contains many regional variations, and only three regions (London, Wales and East Midlands) recorded price falls last month.
The Rightmove website said there had been a "patchy but active start to the year, with more northerly regions faring better in terms of pricing power and willingness to move than those further south.”
Miles Shipside, director of Rightmove, added: "New sellers and their agents are reacting to market forces and lowering their pricing aspirations by more and sooner than usual.
"Stretched buyer affordability and the cooling markets in the south and in upper price brackets have combined with the ongoing political uncertainty to change pricing optimism into pricing realism."
Oliver Blake, managing director of YourMove, said uncertainty and confusion over Brexit were making both purchasers and sellers take a "wait and see" approach and that this was having a dampening effect on prices.
Of course, the 564,000 question remains: will house prices crash if there isn't a deal?
Ruban Selvanayagam, co-founder at Property Solvers, believes a no-deal Brexit could cause a run on the pound and inflation.
"The Bank of England could be forced to raise interest rates beyond the historic lows we've seen since the 2008-09 crash. This could potentially lead to some kind of correction in the property market. But, again, these things are very hard to predict.”
Property market analyst Ruth Shine said: "Any seasoned property investor will tell you that just like the stock market, the property market goes up and down in cycles, but over time it has always gone up by more than it has gone down.
"If you want n immediate return on your invest-ment, it is probably a risk to invest until things are clearer. But anyone with a long-term interest can have confidence in the market and take advantage of falling prices in places like London due to Brexit to buy cheaply.”
Of course, most people aren't property investors. For the majority of buyers, purchasing a house is about securing somewhere to live and avoiding the high costs and insecurity of renting.
If you are selling a property and buying another one to replace it, what you may lose on the swings you would gain on the roundabouts. If property prices go down, you'll get less for what you sell, but then what you buy will be cheaper. However, it is different for first-time buyers, so the question of whether Brexit is going to send the market into a tailspin is more crucial to them than anyone.
Many first-time buyers are taking advantage of the currently low mortgage and interest rates by securing a good mortgage rate and locking it in with five-year, fixed-rate deals.
This is what Mike Garry, who purchased an apartment in north London, did: "I was paying a rent and decided that it would be cheaper to buy even if the value of my property went down a little.
“And so that I could get some certainty, I fixed my mortgage rate for five years.”
Mohammed Salim is currently looking for a property in Manchester. He said: "I figure that interest rates will go up after Brett, so I want to find some-where before Brexit and take advantage of low rates.
"I mean, even if prices go down after a hard Brexit, I wouldn't regret it. What is the point of having a cheaper property post-Broth if interest rates go through the roof and mortgages are harder to get? Better to get a fixed deal now and lock it down for five years.”
