What does Brexit mean for the east central Scotland property market?
As we get closer to the 29 March 2019, when the UK is scheduled to leave the European Union, the focus of most of the country is on Brexit and what it will mean once we have departed. There seems to be an ever-increasing chance of a no-deal Brexit, which some sources say could have severe consequences for the UK economy.
One of the alleged repercussions of a no deal exit from the EU was house prices across the country crashing by 35% – it was claimed Mark Carney, the Governor of the Bank of England, had predicted this during a visit to the cabinet in recent weeks. However, he has since clarified that this was not a prediction, but one of the worst-case scenarios presented to the cabinet used as stress tests for British banks, designed to ensure there is no repeat of the 2008 financial crisis and they are suitably prepared for all potential outcomes.
Carney has since said that the Bank of England is not predicting a property market crash as a result of the UK government being unable to reach a deal with the EU. However, the news of this worst-case scenario has led several to call out the economic damage that UK may face if Brexit is pushed through with no deal established, particularly in terms of property prices.
So, what does Brexit mean for the east central Scotland property market? ESPC’s August 2018 House Price Report offered positive news for both buyers and sellers with a 5% annual increase in the number of properties coming to market and a 3.4% increase in average selling prices compared to last year. Furthermore, selling times remain short and more properties are achieving over Home Report valuation, indicating that there continues to be strong demand from buyers, even as the UK gets ever closer to leaving the EU.
The outlook for the east central Scotland housing market is currently positive, but could the uncertainty of Brexit affect this at all?
Claire Flynn, a spokesperson for ESPC, said: “At the moment, the east central Scotland property market is flourishing. House prices are on the up, and there are more properties coming to market which is a positive sign for buyers.
“The uncertainty surrounding Brexit and whether a deal will be reached with the EU is not ideal for the UK economy. There is a possibility that this ambiguity may deter buyers slightly in the short term, but this doesn’t appear to have occurred yet, as we continue to see short selling times and homes selling for over their Home Report valuation. It is also unlikely to have a long-term impact – the property market of Edinburgh and east central Scotland has proved to be remarkably resilient in the past, and we expect this to be the case with the changes that leaving the EU will bring.”
Graham White, Head of Sales at Anderson Strathern, commented: “2018 has very much been business as usual in the Edinburgh and Lothians property market. In Edinburgh, we are still seeing strong prices achieved and often via closing date scenarios. However, we have recently seen a slight stall in buyer activity (not uncommon in August), which has continued over into September. It could, of course, be a delay from the summer months, however we suspect it could be people taking stock, and looking more closely at possible Brexit outcomes.
“During the 2008 financial crash, we, as agents, had to adapt. Buyers became rarer and fewer closing dates were carried out. However, buyers will always exist. Providing the correct advice and strategy at that time to the seller will be essential to help properties sell.”
Ken McEwan, Chief Executive of McEwan Fraser Legal, said: “There is every chance there will be a property correction in the market with uncertainty over Brexit and there is already evidence that Britain’s housing market is grinding to a halt in some parts of the UK as departure from the EU comes ever closer. I believe, however, prime properties in desirable parts of east central Scotland, particularly in the east end of Edinburgh’s New Town, will escape any serious correction due to the regeneration of the area. Also, areas with a reputation for good schooling will also, I believe, escape any downturn, driven by supply and demand.
“The housing market is largely influenced by wages, interest rates and affordability. If the banks stop lending and increase interest rates this will be the catalyst for a correction more so than Brexit.
“I can’t see that significant a drop in property prices happening in east central Scotland because many people don’t have that much equity in their properties, so will be unable to sell. If their debt is getting serviced, the banks will be unlikely to repossess as that would just facilitate a property crash. My advice to property sellers looking to sell post-Brexit is to look at the “cost to change” – if you end up getting less than expected for your own property, then you should make up any shortfall in your next property. If everyone becomes realistic, we will all escape any property downturn, but you can never control market sentiment and temporary panic.”