Brexit is not necessarily bad news for the UK
And so it has come to pass, the UK is one step closer to leaving the European Union, which means uncertainty will creep into property markets in the coming months, but it is not all bad news.
So many of the headlines have concentrated on how prices could fall, how there won’t be enough workers in the construction industry unless steps are taken to address the skills crisis, and how interest rates will rise.
But there are positives as well. Builders will, by all accounts, be glad to see the end of EU red tape, falling prices will help first-time buyers and, in reality, interest rates are unlikely to rise anytime soon and could even fall.
It must be remembered that the UK housing market is very much tied to the economy and wages, so it is these two areas that will give us clues as to how the property markets will play out. Yes there is likely to be less investment from overseas buyers in the prime property market in London, but this will be very short term as currency exchange will soon entice buyers adopting a wait-and-see attitude.
The Chancellor George Osborne made a statement on Monday, but there is unlikely to be anything concrete regarding the housing market for now. He is much more likely to wait and see if anything needs to be done, but probably takes the view that if the economy is shored up then so will the property sector.
Yes, borrowers who are looking to make the biggest financial decision of their lives want to see and feel that nothing is likely to risk their jobs or increase their mortgage payments, but if interest rates come down and they can secure a five-year deal on a very low rate then they should have some security. Indeed, economists at JP Morgan have predicted that borrowing costs could fall to zero by August.
There could be a reduction in housing transaction numbers until borrowers are more certain of what the position is, but this is unlikely to be long term. Those who have to move house for a job, for family reasons, etc., will still do so and the lack of supply is not suddenly going to change overnight.
Once everything has settled over the summer months, the market is likely to pick up again later in the year. So, the inherent under-supply of housing should continue to underpin the market as the demand will always be there.
It should also be remembered that within the UK there are very different property markets. Growth in London has been slowly for some time, especially in the prime sector, so that may continue dipping, but markets in the north of England, for example, are unlikely to be affected to the same extent.
The general opinion seems to be that the result of the referendum is a shock, even among those in the Leave campaign, but the Bank of England, the Treasury and large companies will have made contingency plans. The UK housing market is too resilient and comes from a base of being a good long term investment whether for home owners or commercial investors.
That will not change.