Brexit has got a lot to answer for.
From the increase in sale of Just for Men to stressed-out politicians who have had to watch on as more and more grey hairs sprout from their legislation-addled heads, to the widening societal chasm that has divided Leavers and Remainders to concerns over food and medicinal supplies, so far the whole thing has been less than the big party that Nigel Farage and co promised.
One area that has particularly suffered in the midst of the disarray caused by the EU divorce is the UK housing market, which continues to ricochet from calamity to calamity in the midst of the Brussels back-biting.
The Office of National Statistics (ONS) have just released their latest batch of figures, and the most alarming takeaway point is that in the span of time between January-July 2019, the UK housing market grew at its slowest rate since September 2012.
Okay, so the optimists will say that the 0.7% growth figure is still a positive return, but it’s the underlying psychology that is the important point of note here. For the first time since the end of the last recession, property sellers are having a tough old time of things.
London and the South East Properties Amongst Worst Hit
The ONS has also stated in their research that the UK property contraction has been ongoing for three years now, which can roughly be attributed to the economic slowdown in the wake of the EU referendum.
Unsurprisingly, the market is driven by property transactions in London and the South East of England, where average prices are a lot higher than the rest of the UK.
And it is these geographical areas that have experienced some of the worst figures, with property values in the capital decreasing by 1.4% on the year-to-date and 2% in the South East.
Worst hit of all was the North East, where YTD figures revealed a 2.9% decrease fired by an eye-watering drop of 2.1% from June to July alone.
There was better news for sellers in Wales, where the average property price has risen by 4.2% in 2019 so far.
There is a complete lack of momentum in the property market then, and basic market economics dictates that when demand falls so too does price.
So, is now a good time to be buying a new home or not?
The Case for Buying a New Home Now
We can probably split the answer between two unique parties: those who are buying their FIRST home, and those who are already on the property ladder looking to move on.
It’s all a question of value and equity, really. If you are having to sell your home prior to buying a new one, then clearly the amount you are making is likely to be down on what would be your expectations in a fair and buoyant market.
So, while the price of homes on the market is generally coming down – great news for buyers, if you need to release maximum value in your property, as a means of moving up the ladder, then you may find your options restricted.
These are good buying conditions….but only where you aren’t reliant on selling your home at maximum value.
Which brings us on to first-time buyers, who might be renting or living with friends or family.
In this case, you aren’t tied down to your present property’s value, and so have much more freedom to enter the market. If you have a decent deposit, there are still stacks of mortgage options available despite the downturn.
And remember, you still have time to take advantage of the government’s various Help to Buy schemes. The ISA will be closed to new applicants in November 2019, while the Equity Loan scheme will run until the spring of 2021.
Whichever option you opt for, this is a fantastic way of accessing ‘free money’ – not an opportunity that comes along every day!
Reasons for Not Buying a New Home Now
When confidence in the market is low, it makes it harder for property sales to complete – especially where there is a lengthy chain relying on all sales not falling through.
So buying a new home, even when conditions are favourable, can still be a frustrating time.
And how significant is that price drop? Let’s say we are buying a new home in Brighton. Allowing for the 2% decrease in value, that means that a property that was worth £300,000 a year ago is now worth £294,000, which in the grand scheme of things isn’t that huge a monetary loss.
And remember, we have no idea of knowing how low the market will sink – or how long this depression will last.
So, if you buy today, how can we say for sure that you wouldn’t have been able to get your dream home even cheaper if you had waited six months?
And, if you plan on a quick turnaround and want to sell up and move on again in, say, three years, there is absolutely no guarantee that the market will have recovered enough for you to make a profit.