How will the Brexit deal affect Ceredigion house prices?
The UK has left the EU. The UK government and the EU have now agreed a deal on their future relationship, how has this affected Ceredigion and house prices?
Christmas Eve brought the news that Boris Johnson had conclusively agreed on a Brexit deal for the UK with the European Union. This gave optimism that the economic turmoil of leaving the EU would be radically reduced, yet what will this ‘trade deal’ do to the value of your Ceredigion home and the mortgage payments you will have to make?
Since the Summer, the Ceredigion Property Market has been booming, yet many commentators have cautioned that the momentum cannot last. With unemployment and end of Stamp Duty Holiday at the end of March, the Halifax reported last week that they believed UK house prices would drop by at least 2% (and in some areas 5%) in 2021.
We find it fascinating the Ceredigion Property Market has defied the doom and gloom swamping the wider British economy in the last seven months. The Ceredigion property market has profited from the large swell in demand from better-off existing Ceredigion households trying to buy larger Ceredigion houses (as they required to work from home) together with the added benefit of saving money from Stamp Duty Holiday.
Ceredigion House Prices are 4.9% higher than a year ago, making our local authority area the 160th best performing (of the 396 local authorities) in the UK.
With the Brexit deal being voted through in the Commons on the 30th December, many say this will boost the property market just as the Government-backed measures supporting the property market come to an end. Yet, in the face of rising unemployment due to the pandemic, the Brexit deal may do little more than avoid uncertainty for the Ceredigion housing market.
What will happen to Ceredigion house prices?
The Ceredigion property market in 2019 was held back because of the uncertainty of the Brexit deal. In January 2020, we saw the demand released in the fabled ‘Boris Bounce’, only for buyer and seller activity to fall off a cliff in March during the first lockdown. It then took off like a rocket once lockdown was lifted. UK House prices are 4.19% higher today, year on year (although some areas breaking the mould, like Aberdeen whose house prices have dropped 5.1% and at the other end of the scale, Worcester’s house prices have increased by 11.9% year on year). A lot of that growth in UK property prices has been fuelled by buyers spending their stamp duty savings on the purchase price of their new home. Yet, it cannot be ignored.
Of 25,200 workers in Ceredigion, 2,600 of those are still on furlough (although roughly 40% of those people are still only on part-time furlough)
When the furlough scheme ends in April 2021, unemployment is likely to rise to in excess of 11%, whilst the protection for the homeowners utilising mortgage holidays will finish.
Piloting the rocky shoreline of the recession is more important than any Brexit deal for Ceredigion homeowners, buy-to-let landlords, buyers and sellers.
In April, the market will also be dealing with the end of the Stamp Duty Holiday, which is due to come to an abrupt halt on the 1st April 2021. Consequently, we will continue to see the house price index's show growth in the first half of 2021. They will then recede as the purchase prices of Ceredigion homes purchased after the 1st April 2021 reflect the lower price paid (because buyers would have had to pay for their Stamp Duty again). Therefore, probably by the end of 2021, the Halifax may be correct, and Ceredigion house prices will be 2% to 5% lower than they are today, simply because of the stamp duty.
Thank you for reading,
If you have any questions regarding Brexit and the property market then please do not hesitate to get in touch.
Best wishes,
The Alexanders Team.