The people have spoken, very quietly with pencils (and pens, but still they have spoken and Britain is now heading out of the EU. What does Brexit mean for the property market? What does Brexit mean for house prices, for buyers, for owners, for landlords and for tenants?
All good questions and all likely to be covered by every news outlet, every property blogger and every halfwit in between. Realistically any prediction beyond the initial upheaval and instability are simply predictions as we have no idea of the government’s future policy regarding a trade deal with the EU or in fact pretty much anything else. So we’ve split this into what we do and don’t know and some conclusions we can draw from it all…
What we do know…
- 17,410,742 voters wanted out and won
- The pound has taken a dive but has already bounced.
- The FTSE 100 has taken a dive and bounced
- Uncertainty breeds volatility in major markets
- The fundamentals of the UK economy remain strong
- There was under supply in the market on June 24th
- There was excessive demand superheating prices on June 24th
- House sale transactions in 2015 were still considerably below the peak and below the long term trendline
- The UK is likely to lose its AAA rating from S&P
What we don’t know…
- Who the next Prime Minister will be (we can all have a good guess though)
- Who will win Euro 2016
- Future policies on trade with the EU
- Whether foreign currency buyers will see UK house prices now undervalued with the drop in the £, or whether it remains too great a risk due to greater macro-economic uncertainty
- When Article 50 will be enacted
- What will happen to house building over the next few years and therefore supply levels
- How buyers will react to the uncertainty
- What happens next!
It was a pretty dramatic result and one that very few actually predicted. The bookmakers had leave at 9/1 at one point last night before it came in with a relatively healthy majority. Thankfully, the Treasury and Bank of England will have prepared for just this eventuality and will do everything in their power to ensure the wider economy isn’t overtly affected.
For the property market, we are certainly entering a period of uncertainty and buyers and owners alike will be treading with caution and likely to see ghosts in every cupboard. We believe that the underlying fundamentals of the economy are strong, that housing supply will remain low and we are ultimately relying on just how much the buyers out there want to buy homes.
Properties fairly priced in popular areas will continue to sell, whilst overvalued properties will simply gather dust. Now is the time to ask:
“Do I want to sell my home?”
“Do I want to buy a new home?”
If so, being responsive to the market is the only sensible way to navigate the current uncertainty that is clouding our industry.