What could a No Deal Brexit Mean for the Property Market
With the Brexit debate currently dominating the news the question of what will happen to the property market if there is a No Deal Brexit is a concern for any homeowner and of even further concern for anyone who is currently looking to buy or sell. As Theresa May has said "it will bring chaos instead of certainty". A flourishing property market relies on certainty at it's backbone and it's clear that the uncertainty of having a No Deal Brexit will negatively affect the property market but the question is for how long? Mark Carney believes that we could see falling house prices for the next three years.
There's much confusion about what No Deal actually means. The scenario would still leave us obliged to leave the EU but with the unfortunate prospect of having no plan in place. Without a plan, existing trade relationships could automatically be hit with expensive tariffs both Imports and Exports, and with no withdrawal agreement in place there would be no time to negotiate trade deals. On a positive note we could avoid paying the £39 bn divorce settlement.
What does a No Deal Brexit mean for the UK economy as a whole
- Serious Immigration issues could arise, talk of a Tit for Tat immigration war could result in European countries expelling Brits and visa versa.
- There has been much talk about the flow of agricultural items in and out of the country with catastrophic ques at borders and agricultural items such as food automatically being hit with huge tariffs. Prices at supermarkets could spike up overnight.
- The value of the pound could fall to the lowest levels we have seen making overseas purchases even more expensive for both businesses and consumers.
- Mortgage rates could further increase.
- With No Deal the Eu will want Ireland to implement a hard border.
- The property market will suffer.
What does a No Deal Brexit mean for the UK Property Market
It's difficult to predict but what can be said is that the property Market doesn't react well to uncertainty and that is essentially what No Deal means. The most credible place to look for some foreseeable words would be from The Governor of the Bank of England Mark Carney back in September when he said that house prices could fall by as much as a third over three years. He also comments that mortgages could become even more unaffordable with likely interest rate hikes and a fall in house values which could force many homeowners into negative equity.
With No deal many businesses could be at threat of closure or reducing staff levels. Unemployment could increase and in turn there will be less house buyers and more sellers. With such uncertainty it's unclear if mortgage approvals will require a stricter criteria, nevertheless there may be many first time buyers waiting for an opportunity to get onto the property ladder once prices are cheaper and our domestic Help to Buy schemes are still set to remain in place until 2023.