Should we be adopting the crash position?
There’s no doubt comments made by the Governor of the Bank of England, Mark Carney, on Friday (September 14) meant that, for many involved in the UK property market, the week ended on a sour note. (https://www.bbc.co.uk/news/business-45516678)
No one who has bought a house recently wants to hear that they could be sitting on an investment which could be worth as much as a third less within a year thanks to a no-deal Brexit.
Also, if you were thinking of selling your home, you could also be forgiven for feeling a little less optimistic about finding a buyer … and there’s the rub.
Nothing significant has changed over the last 24 hours; the political landscape is the same and the British economy is performing pretty much as it was a few days ago. But, when someone with the influence of Mr Carney speaks, there’s a significant risk that people listen. They may even change their plans as a result and suddenly a few words of warning become a self-fulfilling prophecy.
We’ve Been Here Before…
But, before we descend into a pit of gloom over the destiny of the UK property market, let’s remember this is something we’ve heard before.
Indeed, back in 2016, the Chancellor George Osborne was predicting property values would plummet 20% if the UK voted to leave the EU. They didn’t.
In fact – although it’s fair to say it hasn’t been with the same rapidity – they have continued to rise with some experts suggesting the average house (whatever that is) could be worth up to 5% more by 2025.
The reason? Well, it’s not just one thing; there are quite a few variables which influence how much your home is worth and – no-deal Brexit or not – they’re not going to change, or at least not immediately.
Business As Usual
For a start, there will always be buyers out there. People will always have to move house because their family grows; because they get a new job or because of other numerous personal circumstances which have nothing whatsoever to do with the economy. People will always have to sell, often for the similar reasons. In other words, the property market won’t freeze.
What’s more important is maintaining a supply of affordable homes, and that’s something the government can influence by encouraging developers to build more of them. However, to meet the building targets proposed by Westminster, building firms first need to find enough workers with the appropriate skills – and, until now, many of those have come from the continent. Whether they will continue to do so after Brexit remains to be seen.
So in short, although Mr Carney’s remarks are not particularly helpful, it’s worth remembering the property market in the UK has chugged along regardless for over two years and has even seen some modest price increases so, in the short-term, there’s little reason for that to change.
Even with a no-deal Brexit though, there is no guarantee that Mr Carney’s predictions will quickly become fact. Indeed, it’s worth noting his remarks describe a “worse-case scenario” which isn’t the same thing as a cast-iron guarantee.
So, if we have any advice, it would be against any knee-jerk reaction. Of course, it would be irresponsible to disregard Mr Carney’s remarks but, equally, they need to be seen in context with all the other factors which are at play and we need to remember even he points out a property crash is by no means a foregone conclusion.
Each buyer and seller must decide what they do as a result – but we’d urge everyone to be sure that, whatever that is, it’s based on all the facts and not a single headline.
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