Brexit & market uncertainty

Date Published 18 March 2019

I read with interest this week a report from the BBC taken from data compiled from the Royal Institute of Chartered Surveyors (RICS), that 77 % of their members surveyed were of the opinion that both buyers and sellers were currently ‘sitting tight` over the uncertainty of Brexit and that this was having a knock on effect within the housing market. Would I agree with their findings, the answer simply would be Yes.

I have spoken of Brexit before and the fact that commentators had their predictions wrong when the country first voted to leave nearly 3 years ago. The Bank of England were of the opinion that prices would drop 30% as a result of the vote. Yet what actually happened locally was that prices continued to rise. Yet, I wonder whether the predictions will in fact become reality if this is perhaps the start of the bubble burst and we have just gone through the honeymoon period.

The RICS report highlighted that the number of queries by potential buyers, sales and instructions from sellers had all dropped for six successive months. RICS has pointed to stalling activity, and sales taking longer to complete, in many of its recent monthly reports.

Uncertainty always creates elements of caution on the part of both buyers and sellers. Sellers have approached us wanting to sell as they figure prices have reached a peak and buyers are not as abundant as one would expect for the start of Spring.

I think that the problem is that we as a country still do not have a clue what the outcome of this will be with less than 2 weeks to go till 29th March. Some would consider this somewhat of a shambolic effort on the part of the Government and politicians to make formal ‘good` agreements. Yet good deals for the UK mean a bad deal for the other party, namely the EU. So common sense states that we are never going to achieve a good deal and the best that can be achieved is a compromise of best wishes. This is not so untrue with the house hunting process as if ones expectations are too high, you have no hope in chance of finding that perfect house. This means either aborting or being more realistic. More that often for those that do not really need to more, they will go down the abort route, often taking their house off the market and staying put. Those that need to move for example, to gain more bedrooms space have to re-consider and maybe move to a cheaper area. Though what is ironic about all this is that you are not going to buy a house if deep down it`s not right for you. Yet it appears the current Teresa May proposals are being pushed through as if one needs to be railroaded down this route as there is no alternative. Though a peoples vote would be the equivalent of the aborting option.

Should the Government achieve a Brexit deal, this is only the starting point, the rear negotiation with traders throughout the world including the EU still needs to occur. Do we have confidence that this would be achievable given the current par larva. One fears not. Yet what is being decided is something which would effect a generation to come. Is it the right road to go down? Nobody knows. Hindsight would be great, Yet, I see many just going with one`s gut feeling, which is often the case with picking the right buy who will go onto exchange and not pull out part way though. With Brexit we do not really know and some have a somewhat blasé opinion that it will be ‘alright on the night`. Maybe yes, maybe no. I think the truth is that nobody actually knows. So do you gamble on a whim I ask? It appears we are more cautious when it comes to house selling as the money physically comes out of our own pockets, and are willing to be more risk adverse when it involves national decision making.

Maybe on a positive note, returning to the RICS survey surveyors were "broadly positive" about the next 12 months what with greater clarity assuming of course that things are not extended indefinitely! Though, as would be expected with a Government department to ease the burden or soften the blow chancellor Phillip Hammond has provided further funding for affordable housing and the Office for Budget Responsibility forecast that UK house prices would rise by 0.8% in 2019, and 1.3% in 2020.

Are we any more the wiser?