Islay Robinson, Chief Executive Officer at Enness Private Clients, comments: “Now that Britain has voted to leave the EU, we will have to wait and see how long negotiations take, to see what the real outcome will be for the property market. The practicalities of a separation may take years to implement which could leave the market in a limbo state and foreign investors are likely to continue to hold off to see how the UK performs on its own. Those market participants who were waiting for the outcome may continue to stall until the picture is clearer. Prices will depend on how supply is affected by falling foreign investment and continuing domestic demand. Will homes continue to be built at the current rate? Potentially the greatest impact here will be on the London market. With just under 50% of central London investors being foreign, we’d expect prices to flatten in the short-to-medium term. On the other hand, if sterling plummets dramatically, the UK market will become far cheaper for foreign investors, making it a more attractive prospect – although investors will have to weigh this against London’s potential loss of status and as a politically stable economic hub. How interest rate increases are handled may also be slightly different now.”
For further information on Enness Private Clients, please visit: www.ennessprivate.co.uk
Camilla Dell, Managing Partner at Black Brick, comments: “Now that an ‘out’ vote has been cast, we will, no doubt, experience a period of ongoing uncertainty as the UK seeks to agree a way forward with the EU. Sterling may weaken even further, making London property even more attractive to foreign buyers.
“Short term nothing changes immediately. It will be many, many months before the UK negotiates a new way forward outside of the EU. The leave vote however has created huge uncertainty which is now being seen in sterling which has plummeted to historic lows against the dollar. We may see some opportunistic overseas buyers emerge as a result. However many experts are also predicting a fall in property prices which we are yet to see. Price falls on property take much longer to work their way into a market, but you can bet we will see some buyers try to renegotiate their deals today, and future buyers being even more aggressive in their negotiations and price sensitive. For the brave and overseas buyers this is a buying opportunity. For the more conservative, they will sit on the sidelines and watch what happens.
“In general terms, London is going to retain its attractiveness to wealthy international buyers regardless of this outcome; its cultural attractions, geographic location, legal system, and concentration of talent mean that there will always be demand for Prime Central London property.”
For further information on Black Brick, please visit: www.black-brick.com
Andrew F. Reeves, Managing Director of Andrew Reeves, comments: “Now that Britain has decided to leave the EU, buyers who really do need to move – for work or family reasons – and have been waiting for the EU decision, will re-emerge and begin their searches. Non-urgent buyers will be less enthusiastic, instead waiting to see if house prices ‘soften’ further, and this may well continue throughout the rest of 2016. Thereafter, the rate of recovery – of demand and property values – will be influenced somewhat by the mood in the country. This will be led by the announcements, intentions, and even the ‘body language’ of our political leaders. Will the tone be set by a departing and somewhat gloomy David Cameron, a buoyant Boris Johnson, or a ‘vanilla’ A.N. Other? Hopefully they will give us some idea of the speed with which the UK can, and will, be set on the road to new prosperity outside the EU.
“Some ‘Remain’ campaigners were predicting the UK’s economic recovery from Brexit could take five or even ten years. However, demand for London residential property will not entirely depend on the country’s macro-economic position; the world’s most popular capital city will always enjoy huge global appeal – and demand for property in London will continue to outstrip supply, for the foreseeable future.
“Decisions by international banks and multi-national companies in the City on whether to stay put or move out of the UK may have some influence on both property sales, and on rental demand from corporate tenants.”
For further information on Andrew Reeves please visit: www.andrewreeves.co.uk
Adam Challis, Head of Residential Research at JLL, comments: “A Vote Leave result brings an unprecedented new dawn for Britain, with considerable uncertainty over the likely impacts for the next few years.
“We expect an immediate slowdown in housing market transactions, in the order of 10%-15%, resulting in downward pressure on prices for at least a couple of years. We anticipate current activity levels will return but this is unlikely before late in 2018.
“Price growth will be flat over 2016, reversing gains from the first half of the year, while our central expectations of price falls between 3% and 5% in 2017 and 2018 are based on the best case scenario of a relatively orderly adjustment to our new political realities. It is crucial that UK politicians and civil servants push hard to regain transparency early on over the terms of our trading relationships with key European Union partners.
“The housing market relies on confidence in the jobs market, coupled with access to a competitively priced mortgage market. The Vote Leave result will drag on new business investment and curtail new employment activity. Many sectors, from manufacturing to financial services and biosciences, will be forced to consider the implications of this result on trade and whether this has an impact on the UK as a base for operations.
“Whilst there are still compelling reasons for companies to base their European operations in the UK, this business review process is likely to constrain investment and prolong employment uncertainty for many across the UK.
“Fortunately, the mortgage market has benefitted from the record low Bank of England base rate for the past seven years. This support will be welcome for many movers and will aid liquidity in the housing market during the next couple of years.
“The London housing market will feel the effects of the Vote Leave decision more deeply. The interconnected trading relationship between London and the rest of Europe means the implications are more complex. This will exacerbate the uncertainty for London’s homeowners. Paradoxically, investors may well identify opportunities in this market over the short-term, particularly international purchasers who can benefit from the currency arbitrage that has opened up by a weaker pound sterling.
“While the focus leading up to the Referendum was on the UK’s international trading relationships, we are deeply concerned that domestic politics will now be the key risk to the housing market. Regardless of the Referendum outcome, addressing the imbalance in the supply of housing in the UK must be a critical priority and concerted attention from politicians to deliver credible, lasting solutions to the supply conundrum is desperately needed. Protracted infighting within the UK’s political parties will only harm the UK economy and, with this, any chance of a timely recovery from the expected economic slowdown.
“The Referendum has been an unwelcome diversion from vital domestic policy challenges. An expansion of housing supply, particularly for renters, first-time buyers and retirees, needs sustained policy support, alongside a clearer commitment to delivery of affordable housing.
“There is no shortage of critical housing market issues for the Government to turn its attention to; focus on solutions is needed now more than ever.”
For further information on Andrew Reeves please visit: www.jll.co.uk
For further press information on any of the above, please contact the Foundation PR team:
Harriet Saywell-Lee – Harriet@foundation-pr.co.uk
Alexandra Hellyer – Alexandra@foundation-pr.co.uk
Telephone: 020 7580 2492.