The UK’s decision to leave the European Union, followed closely by the resignation of the Prime Minister, has created a vacuum of uncertainty and a period of volatility for the UK’s property market.
In a joint statement issued by Mark Hayward, managing director of NEEA, and David Cox, managing director of ARLA, it was announced that: “The outcome of [the] EU referendum will create a period of uncertainty among home owners, buyers, investors, landlords and developers.
“In the short term we believe that both prices, and rents, will remain stable, but we cannot be certain about the next quarter as political instability and market unrest could lead through into prices in the housing market. We believe that the UK housing market is resilient, as is the supply chain that drives it.”
Andy Martin, senior partner at Strutt & Parker, said: “We have seen a real cutback in trading due to the uncertainty of this vote. What we are now waiting to see is how our clients and markets will react to this. I suspect that they will continue to tread with caution.”
Some commentators have identified the opportunity for investors that a short period of uncertainty will create. London agent Wetherell’s chief executive, Peter Wetherell, said: “Sterling has plummeted to a low not seen since 1985 and this will now create a short-term buying opportunity for US dollar and Euro-based property investors.”
In the same vein, Liam Bailey of international real estate firm Knight Frank said: ‘While we are entering a period of renewed uncertainty in the UK and London market, ongoing issues around EU and especially Eurozone stability, which will be highlighted in the run up to French and German elections, are likely to counter this risk and shore-up London’s safe haven appeal.’
In Bailey’s opinion, the demand for prime London property rests on a wide range of drivers, most of which are unaffected by the referendum decision. The “scale of London’s business cluster, depth of skills, education, lifestyle and language” are likely to continue to appeal to investors.
For the short term, at least, it does not appear that a rush to sell investment properties and a dramatic shortage of rental homes will lead to an increase in prices. Nor however, does it mean that landlords are suddenly going to accept very low offers on their rental stock. We expect that any price corrections will take place gradually as landlords and investors defer action until the wider impact of Brexit becomes clearer.