UK Property Sales Plunge Amid Brexit Uncertainty


July 2019

UK Property Sales Plunge Amid Brexit Uncertainty

Property sales plummeted to a six-year low in June, as buyers and sellers, wary of Brexit turmoil, put plans on hold.

Property transactions were down 16.5% from the previous year, as just 84,490 homes changed hands, according to the latest figures from HMRC. In contrast, 101,150 home sales were completed in June 2018.

Sales were down in all UK regions for the third consecutive month, with declines most precipitous in Wales, where sales had dropped 43.9% year on year.

Tomer Aboody, director of property lender MT Finance, said the drop in transactions was “astonishing.”

"Some transactions are happening but the volumes are not there as people can’t afford to move. Affordability is an issue, coupled with uncertainty around Brexit, which is having a significant impact on people’s lives and decisions about whether to move or not.”

Others in the industry were more optimistic, or even called into question the data.

Marc von Grundherr, director of estate agents Benham and Reeves, said the drop was likely a “momentary stutter” that actually reflected buyers’ and sellers’ states of mind in March, when most of these transactions were accepted and when UK’s exit from the EU seemed imminent.

“Scary reading on the face of it, but it’s important to note that this data is reported with a bit of a lag and so the level of transactions being relayed are really those accepted back in March,” he said.

“With many of us, perhaps foolishly, believing we would be exiting the EU at the end of March, it stands to reason that the vast majority of buyers may have refrained from a sale until this event had passed.”

Others noted that the figures didn’t correspond with data about mortgage approvals and completions. Figures from lenders have shown a rise in mortgage approvals for first-time buyers in recent months. Meanwhile, data from UK Finance found the number of mortgages completed in May 2019 was comparable to the number completed the previous May.

Some speculated the drop in transactions was thus due to squeamishness from cash buyers in the run-up to the original 29 March deadline for the UK’s exit from the European Union.

Mike Scott, chief property analyst at estate agents Yopa, said: “The data suggests that the number of mass-market purchases of homes with mortgages hasn’t changed much, and therefore there has been a very sharp decrease in the number of homes bought for cash, which tend to involve buyers who are not in chains and have no pressing need to move, letting them delay their purchase.”

“The most likely explanation is that the uncertainty of the impending Brexit deadline caused home buyers, especially cash buyers, to hold back from agreeing purchases in the first three weeks of March, before an extension was agreed, and that these delayed sales would otherwise have gone on to complete in May or June.”

He said he expected transaction volumes to recover in July and the autumn—at least until the market is roiled by the new October deadline for Brexit.