Mark Carney has recently announced that he believes that the UK property market would crash by 35% in the event of a No Deal on BREXIT.
Whilst this is a wild figure, I don’t think that he is wrong with a market recalibration… well at least in London.
There are so many things going on in the property market at this time:
- Banks down valuing property prices and just not lending like they used to
- House prices completely outstripping annual wages on a scale that has never been seen before – For example in Wandsworth house prices are (on average) 19.7 x annual wages in 2017 compared to 11.5 x annual wages in 2007…just before the housing crash!
- Key players are pulling away from the market – i.e. Europeans
- Agents are still over-inflating asking prices of properties with the optimistic view that house prices will always rise
- Uncertainty is wreaking havoc with people’s thought process
It’s a catalyst for market changes.
Yet, there are still constants which make for a rising market – supply is dwindling as the UK can’t keep up with building to fulfil demand AND there are still a lot of people in the market who would love to get on the property market, but just aren’t there yet.
This will keep a level on the level of housing market crash that there could be.
Yet, the market is shaking, wobbling under the change. In these times we have to proceed with caution.
Offer low and don’t budge. Don’t allow yourself to settle into any sort of risky situation.
I would love to have a crystal ball and be able to tell you what’s going to happen. Unfortunately I don’t have one in my possession.
Now, more than ever, we have to be keeping a close eye on the market. Be aware of the small changes. Local areas will experience differences… after all if everyone is looking outward from London to buy, how will that put an upward pressure on other surrounding cities?
Markets are intrinsically interlinked, but they don’t all perform the same. A crash in London can see a boom elsewhere. Just because the market could fall, it doesn’t mean that Londoners will be making huge losses… chances are if they brought 3-5 years ago, and experienced 30-50% increases, a 10-20% drop isn’t going to push them into negative equity. It may just push them to invest somewhere more affordable.
Times are changing for the property market. A recalibration is necessary and it’s coming. I can’t see 35%, but 10-20% drops are a real possibility.
Make sure your own property portfolio is bullet proof to this. Pay down on mortgages, get tenants in for longer terms on reasonable rents, look after your assets. We need to sit tight and be prepared for changing eventualities.
What will you do if the market crashes? Are you worried about this? Leave a comment below.
Natasha
P.S Here’s some pictures of me discussing this with the BBC on 14thSeptember! Times are changing, we need to keep our eyes wide open to it!
