On 23rd June 2016 the residents of Wychavon voted to leave the EU by a majority of 58%. During the weeks that have followed, I’ve listened to many predictions of doomsday scenarios for our economy and housing market, but I’m still far from convinced.
A vote to leave the EU, followed immediately by the resignation of the Prime Minister was bound to cause some short-term economic turmoil and uncertainty. However, after falling sharply by almost 14% following the referendum result, the FTSE 250 has already recovered to pre-vote levels. We’ve also already seen Theresa May appointed as the new PM and her new cabinet has been unveiled.
Mrs May has now announced the appointment of her new Housing Minister, Gavin Barwell who was quick to deliver positive news for buyers, particularly those looking for their first home, reassuring of his commitment to build a million new homes.
Despite earlier warnings and widespread expectation that interest rates would rise in the event of a Brexit vote, Bank of England Governor, Mark Carney has now announced that the UK’s base rate will remain at 0.5%. For homebuyers and landlord investors alike, this is very positive news.
According to the National Association of Estate Agents (NAEA), buyers were unfazed in the lead up to the EU Referendum as sales to first time buyers were up in June, and demand for housing increased.
The Rightmove House Price Index in July reported a steady housing market, post referendum.
A small fall in the price of properties coming to the market during the month was put down to the usual seasonal expectations in the run up to summer holidays.
Buyer demand in the two weeks following the shock result was consistent with 2014 and most estate agents across the UK have reported momentum of the sales market continuing despite the Brexit vote, due to an ongoing shortage of homes for sale, low mortgage rates and good availability of loans.
The Brexit result has not rocked the rental market yet either, according to the Association of Residential Letting Agents’ (ARLA) June Private Rented Sector Report.
Despite an increase in buy-to-let properties purchased earlier in the year (due to stamp duty tax changes) all regions outside of London recorded a rise in asking rents during Q2.
Rental enquiries were also up 2% in Q2, according to Rightmove (compared to last year) and were up 1% in the two weeks following the referendum result.
It is true that we still face uncertainty in the housing market and a slowdown in activity during the summer months is anticipated as hesitation is coupled with the usual effects of the holiday season. But despite the Brexit hype, the fact remains that people buy homes and move for many different reasons; work relocation, proximity to schools/ family, retirement, investment, marriage/ divorce, change of lifestyle… and I could go on.
None of these factors are likely to suddenly change as a result of Brexit, even when we actually come to leave the EU.
Sources: NAEA UK Housing Market Report, ARLA UK Private Rented Sector Report, Rightmove House Price Index & Rental Trends Tracker (July 2016).