Brexit - what does it mean for the property market?
Thu 14 Jul 2016
Well, events are moving fast in the Brexit-government-opposition house of cards, aren’t they?!
As I write (Thursday 14th), Theresa May has just taken over at No.10, and her government is taking shape, bringing some much needed certainty to the country – and the property market.
So what does all this mean for the UK’s housing market both over the long and short term?
Business as usual (sort of)
Research out today from the Royal Institution of Chartered Surveyors (RICS) shows a decline in activity from both buyers and sellers over the last three months. Simon Rubinsohn, chief economist at RICS says that this is partly a result of the Brexit vote, but also a correction following the increased activity before April, when the stamp duty on second and buy-to-let homes rose (1).
Bank of England governor, Mark Carney, has also cautioned against complacency, saying that anyone taking out a large mortgage needed to “ensure that [they] can service that mortgage even if times are tough, so think about where interest rates will go, where wages will go in the lifetime of that mortgage."
Yet even he, cautious and careful though he is, seemed to be advising property hunters to be aware of changes in their financial circumstances rather than warning people to steer away of buying property altogether.
Meanwhile London developers Mount Anvil reinforced their commitment to delivering all planned projects, valued at more than £1bn, and we can only imagine that a company with investments to that level will have done their sums (2).
What does this mean locally?
Since June 24th, we’ve only had two withdrawals, and that is nothing out of the ordinary. So what advice would we offer someone thinking about buying into property now? Well, nothing much about our advice would change, to be honest.
We have always said, and still say that property purchasing should not be seen as the route to a quick buck, but rather a good, long-term investment that usually delivers steady capital growth over the medium to long term – as well as somewhere to live or a rental income.
Over the next 10 and even 20 years, we’ll still have an ever-increasing population, with new house-building unlikely to keep pace, fuelling an imbalanced demand over supply.
With all this in mind, we continue to believe that considered, thoughtful property purchasing, backed up with good professional advice, remains a good investment.
Now that we have a new PM, and who seems indeed to be that ‘safe pair of hands’ she’s reputed to be, I am confident that we will see things begin to calm down in our run-up to final Brexit, and believe that our fears, whichever way we voted, will begin to subside and calm with return to our lives – and the property market!
All the best
David Gibson FNAEA