Whilst for months the question leading up to the EU referendum revolved around whether you were in or out, the query currently on everyone’s lips, no matter what their personal or professional standpoint, has to be – “what now?” Here Chris Hope, Partner at Dawsons Estate Agents, provides his view on the UK’s recent exit from the European Union and helps you figure out what’s next for you, your clients and the wider property market…
Business as usual
My view on our recent Brexit is simply business as usual, but for professionals everywhere, regardless of their niche or agency size, it is important to remain clear and positive when it comes to our immediate business future.
Following the momentous decision of the British people to leave the EU I have discussed the potential ‘fall out’ calmly and positively with many of my RAN business contacts across the UK to give both fellow industry insiders and our clients a local expert opinion to help maintain confidence and ensure that we have a clear message to offer to all of our audiences.
The market’s reaction
It would appear that the money markets had not anticipated the ‘out’ vote, however, the Governor of The Bank of England, Mark Carney, has addressed the press with a very calm and confident statement reassuring all that there are contingency plans in place to shore-up the banks and avoid any immediate turmoil.
Key points to takeaway in light of our recent exit from the EU include:
- The Bank of England has huge reserves & plans to react positively to the vote
- The stock market has not crashed and it has been lower this year!
- Intent from ‘overseas money’ clients to buy property has been immediate
- We still have a 500,000-person strong population growth and evidently they have to live somewhere
- The majority of the Great British public are very positive about the result
All the points mentioned above offer some reassurance for what for many has been a shock result, but what’s next for our economy, our security, our relationships with the rest of the world and, more importantly, factors that affect us and our clients a little closer to home?
Well maybe not that short! There may well be a period of re-adjustment, but people will always need a home and will still need to get on with their lives. If prices do need to adjust, we need to remember that if you lose £10,000 on your own house, you will gain it on whatever you buy next. There continues to be strong demand to live in this area and that will never change because this is a nice place to live.
Are people really wanting to put their lives on hold? I doubt it very much. Clients need to be thinking about other factors rather than just the financial consequences of not moving, such as not getting into the right school area, living in a cramped environment etc., plus what goes down will come back up – it’s just a timing issue. Most purchasers don’t purchase with a short time period in mind.
Will property still remain an asset?
The fundamentals underpinning property as an asset are largely unaffected by the vote. In fact, the UK’s population will continue to rise even if EU immigration is curtailed. But the fact remains we are still not building anywhere near enough new homes to meet the rising demand. These supply-side failures continue to cushion property values from other negative influences.
Currently on offer is a 5-year fixed, interest only mortgage at 2.45%, and potentially rates might come down even further. These are once in a lifetime mortgage deals and considerably offset any price reduction.
What’s next for you and your clients?
If you or your clients are waiting for a market that allows them to buy cheaply, with prices then rising, with low interest rates and a huge selection to choose from then they’re dreamers. That market has never existed, and our job is to highlight the pros and cons of current market conditions and make sure that our clients make informed decisions.
Whatever does happen next, the market will find its equilibrium. People will still die, divorce and decide to move, and whether they choose to rent or buy, let or sell, we shall still be in a position to give them professional advice enabling them to make the right choice to suit their circumstances. A difficult marketplace will mean a successful marketplace for us, and those without the knowledge, confidence and experience are likely to fall by the wayside leaving only the strong agents to deal with the transactions.
The market is what it is and as always Dawsons will find a way to make the best of it. We are very good at that having successfully traded for 25 years!