Buyers worried house prices will fall in uncertain future
Mortgage brokers said buyers were postponing or pulling out of property deals as a result of the Brexit vote, fearing that economic uncertainty would make their purchase unaffordable or hoping that prices would later fall.
Andrew Montlake, director at broker Coreco, said a number of clients had contacted the broker to put their purchases on hold as the shockwave of the Leave vote broke on Friday morning. “They want to see what’s going to happen,” he said.
Gary Festa, executive director at broker HFM Columbus, said three borrowers had pulled out of deals after the vote, two in expectation of falling prices to come. Other clients, he said, were pursuing their property purchases but were concerned over their future prospects. “They work for foreign banks and they’re worried about their jobs,” he said.
Recent weeks have seen a slowdown in activity, as buyers and sellers held their breath over the EU referendum, agents and brokers said. But a Brexit outcome that leaves many questions unresolved until lengthy political negotiations are concluded has redoubled the mood of uncertainty.
Property experts said the vote would put a stop to the increased price rises seen in sought-after parts of the market in recent years, in particular London. The Treasury warned ahead of the vote that prices could fall by between 10 and 18 per cent in the event of Brexit. But the number of transactions is also likely to fall, according to Richard Donnell, research director at housing market analyst Hometrack. Looking at the impact of previous political and economic shocks, he estimated that they triggered a 10 per cent fall in transactions in UK cities and 15 per cent in London.
Some foreign buyers were taking advantage of the decline in sterling to make their move. Ed Mead, executive director at agent Douglas & Gordon, said overseas buyers were phoning in to make offers below asking prices on prime central London homes after the currency shift. “US buyers are probably getting things at one-third less than they were a year ago.”
Adrian Anderson, director at broker Anderson Harris, said a non-UK resident had called on Friday morning to accelerate a purchase. “High-value London properties may all of a sudden start to look cheap, particularly for buyers in US dollars. The high-value non-doms may see it as a bit of an opportunity.”
Mr Montlake cautioned that the continued demand for housing would cushion any hard landing. “There is some panic but people need to remember when they’re buying a property as a home not as an investment. People still need to move, they get divorced and they need to live near schools. There is still an imbalance of supply and demand.”