What happens after Brexit in Property?
Most of us heard the fireworks going off at 11pm yesterday evening; the time at which the UK officially left the European Union. But whether you were a Brexiteer or a Remainer, there are still some questions from a lot of the UK about what happens next.
The property market remained in a state of uncertainty throughout the three-and-a-half years it took to get us from referendum to result; but it has shown it’s strength throughout and since the result of the general election on 12th December 2019 has been getting progressively stronger.
Predictions from local agents, as well as national experts, have mostly been optimistic; with some even referring to the positive correlation between present events and the events that followed the vote to join the EU.
What changed on Friday 31st January 2020?
Frankly, not much.
The date marks when the UK officially left the EU. All of Britain’s Members of European Parliament (MEPs) automatically lose their seats and the UK will no longer be involved in any EU summits; nor be able to vote and make decisions over future EU positions.
However, from this date an 11-month transition period begins. This means that the UK will continue to obey all EU rules and regulations for this period of time and, for most, usual day to day life in the UK, along with trade and business between the UK and the European Union, will remain the same.
Why do we have a transition period?
The idea behind the transition period is to give some breathing space to allow new UK-EU negotiations to take place. These talks will determine what the future relationship will eventually look like.
What will happen after the transition period?
The transition period ends on 31st December 2020. At that time, one of three outcomes will happen:
- A UK-EU trade deal could come into force, whereby all agreed future trade regulations will come into effect immediately.
- The UK leaves the EU without an agreed trade deal.
- The transition period is extended, allowing for more time to agree a future trade deal.
How will Brexit impact the economy?
Since the conservatives won majority at December’s general election, many economists have actually predicted that not too much should happen to sterling’s value immediately.
That’s because Brexit (more specifically, Brexit on 31st January) has been priced into the market. Ever since Boris Johnson’s win, it’s been widely accepted and expected that this would definitely be the date on which the UK’s EU membership ends.
“The passing of the Brexit Bill is all priced in by markets and so we should not see any movement based around that event,” Andrew Brigden, Chief Economist & COO of Fathom Financial Consulting, commented in The Telegraph.
Moreover, analysts anticipate that greater volatility in the pound’s value will happen over the course of the next 11 months, particularly as we near the end of the transition period and more is known about the future relationship between the UK and the EU.
What does this mean for the property market?
What we have seen since the general election in December 2019 is that Boris’ and the Conservative win relieved the country of a high level of uncertainty that has been present at the referendum in 2016. The majority of the UK felt confident that Boris would deliver Brexit and, moving on a-month-and-a-half, here we are today…
Since December’s general election, Rightmove reported a strong rise in house prices and more property coming to the market. We believe that this has fuelled confidence in the market and more and more of those sellers that were holding back previously are now coming to market.
The UK property market still remains once of the strongest investment sectors globally. Property, in the UK particularly, is renowned for both it’s stability and it’s resilience against broader economic factors; and, to date, Brexit has had a limited impact on the property market generally – despite what the media may have you think!
Jacobs Steel saw a record year in 2019, with many of our offices doubling the amount of business they did in 2018. We saw a significant increase in first time buyer enquiries and higher completion levels. Coming in to 2020 has been no different, perhaps even seeing the best start to a year we’ve ever had.
The South East has always enjoyed a buoyant property market and is well-known to be one of the most favoured places to live within England and the UK. This is proven by higher house prices across the South East when compared to other regions.
There is much positivity in the air with regard to Brexit and what it could mean for the UK’s economy and property market; but truthfully no-one can know for sure how it will affect our country. Whilst we can watch trends and make predictions, the future is never certain and so we will go through 2020 with a positive, yet cautious attitude; providing the same level of honesty, insight and customer service that our clients are accustomed to.