Homeowners cannot say they were not warned about the potential consequences of Britain leaving the EU. Various experts lined up in the run-up to the referendum to forewarn those thinking of selling their property to be prepared to slash their asking price as a consequence of an inevitable slump in the housing market if the leave campaign won.
Just days before the EU vote, property website Zoopla echoed the Chancellor George Osborne’s dire predictions of the impact of Brexit by projecting that it would cause the average price of a home in the capital to plunge by more than £120,000, practically wiping out nearly all of the gains made by the housing market over the past five years, and leaving some homeowners in negative equity. The vote to leave the EU has set the stage for a protracted breakup and prolonged political and economic uncertainty, with a number of buyers having reportedly pulled out of property transactions in recent weeks.
And yet, the first evidence of the post-apocalyptic Brexit property market shows that house prices have so far defied the gloomy predictions of experts, having actually picked up pace in July, up 0.5% monthly and 5.2% annually, according to Nationwide.
Some analysts also claimed that foreign property buyers would shun London’s housing market post-Brexit, but early signs are that opportunistic international investors are piling into the capital to take advantage of the sharp fall in sterling and the fact that some sellers may be extra-willing to negotiate on asking price in some less active parts of the city. However, the early impact of Brexit has not yet been picked up by Nationwide’s data, as there is a short lag between a buyer making the decision to purchase a property and applying for a mortgage.
But what the lift in values does show is that even during times of economic and political uncertainty, the UK’s housing market, led by London, remains fundamentally strong, supported by a robust labour market, high employment and historically low borrowing rates which have now dropped even further with the Bank of England’s recent cut in interest rates.
Nevertheless, analysts, including respected think-tank the CEBR, believe that housing demand will soften in the coming months, although this may actually help support prices if it is driven by people deciding not to sell as it would exacerbate the supply shortfall, even through a prolonged period of Brexit uncertainty, illustrating the fact that property in London remains a top safe haven for investors. Fulham, in particular, remains a good, safe property investment area and despite an underlying caution among buyers uncertain on the immediate future, confidence in the local housing market is still firm, fuelled in part by growing overseas investors and record-low mortgage borrowing rates, which is leaving some buyers fearful of missing out on choice.
Priced to sell
Despite some reports to the contrary, there are plenty of potential buyers around, willing to jump in where they see fair value. Realistic asking prices remain crucial for generating interest, as those serious buyers that are actively looking will avoid anything that looks to be wildly over-priced. Pitching your asking price too high would be counter-productive in the current environment, and would read as a lack of seriousness to sell, generating only speculative buyers.
A homeowner can do a lot to improve their property’s appearance to entice prospective purchasers - general DIY, de-cluttering, a fresh lick of paint, cleaning the windows, vacuuming the carpet, ensuring beds are neatly dressed, etc. In a buyer’s market it’s more important than ever to put the extra effort in here. Ask your agent for some frank advice, and try not to be offended with their impartial suggestions. It may just make the sale happen
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