The Brexit debate is still raging. While predictions are being made about the likely outcome, more uncertainty seems to be the only constant. For those looking to buy a home or move house, what does it all mean?

The official date when Britain is set to leave the European Union is now just weeks away on 29^th March 2019.

House prices did fall following the referendum. But despite the doom and gloom predictions prices have remained relatively steady since across the UK as a whole. Prices haven’t increased at a pace seen in the past but, for the most part, homeowners haven’t seen significant drops in value either.

House prices in June 2016, when the referendum occurred, was up 8.17% compared to the previous year. A year later, in June 2017, this had fallen by 4.13% and dipped further in June 2018 to 3.03%.  This meant that in 2006 the average UK house price was £212,887. Two years later, it was £228,760. The modest increase was not the catastrophe that some predicted.

However, signalling the lack of confidence in the market, the number of house sales has fallen this year. According to research conducted by Project Etopia, six in ten regions in England and Wales saw sales fall in the first half of 2018. The average decrease in sales was 4.9%.

What will happen to property prices?

There’s no certain answer, not least because we don’t know which direction Brexit will take. Even if we knew, calculating the full impact would be challenging as effects of any deal will depend on many factors.

Mark Carney, Governor of The Bank of England, previously warned that a no-deal Brexit could see house prices tumble. Under the worst-case scenario, prices could fall by a third over a three-year period. For prospective first-time buyer or planning to move, this is daunting, who don’t want to purchase a home only to see the value eroded.

While some prospective buyers and movers are choosing to wait and see, you don’t have to. There are steps you can take to improve your financial security despite a looming Brexit.

1. Consider interest rates

Since the recession, interest rates have remained low. Even following two recent rate rises, the Bank of England base rate sits at 0.75%. Good news for those with a mortgage, as repayments have been low as a result.

As with all things Brexit, opinions are divided. Some believe interest rates will remain some say they will rise following the deal. With this in mind, it may be wise not to stretch budgets too far. Quick calculations can highlight whether you can comfortably afford to pay your mortgage, if interest rates were to rise by 5% and give you peace of mind. With surplus income, it also gives you an opportunity to overpay your mortgage, taking advantage of the current low interest rates.

2. Use a bigger deposit

One of the biggest worries about buying a home before a potential downturn (post Brexit), is the prospective of negative equity, where the value of your home is less than the amount left on your mortgage. It can make it impossible to move and many would have to use savings to do so. Most lenders also won’t let people with negative equity switch to a new deal when their current one ends and this can mean paying higher interest rates.

Often, this is more of a concern for first-time buyers, as they’ll own less equity to begin with. Using other savings to boost your deposit where possible can help to reduce the risk of this happening.

3. Regard a home purchase as a long-term investment

Following Brexit, some experts expect house prices to dip. However, looking at the bigger picture, it’s likely that they’ll recover in the long-term. Purchasing a property with the view that’s it’s a home and long-term investment means there’s less worry if the market experiences some short-term volatility. Over a period of five to ten years, it’s probable that any market downturn will correct. If you don’t sell during a low period, you won’t make a loss. That said, if you do sell then the property you purchase may have also reduced in value.

If you’re looking to purchase a home that you only plan to own for short period of time, it may be worthwhile waiting to see what Brexit will bring in the coming months.

If you’d like to discuss your finances in the context of Brexit, please contact us. We’ll help you understand how the uncertainty and subsequent deal could affect you and your plans.