Brexit is likely to see a significant drop in house prices as sellers sit tight and wait to see how the property market reacts.
Predictions about property prices and buy to let are hard to call as the economy is now about to enter uncharted waters.
Not only has the 52% to 48% Brexit victory triggered a major economic upheaval, but the seismic effects will churn the political landscape as well.
Prime Minister David Cameron has already resigned after leading the remain campaign to defeat.
Expect Chancellor George Osborne to follow after backing Cameron to the hilt over staying in the EU. His position in a new government is likely to become untenable.
Calls have already started to unseat labour leader Jeremy Corbyn, whose lacklustre support of staying in the EU failed to rally Labour voters.
Meanwhile, the City has seen billions wiped off the value of Britain’s biggest companies and the Pound has plunged against the US dollar and euro.
Inflation is expected to rise, exports will become more expensive abroad while imports will sell for less in the UK.
Uncertainty will prompt many home owners and property investors to protect their cash. Many are likely to want to see how interest rates will go before committing to a significant long term purchase such as a new home or buy to let.
Richard Donnell, insight director at Hometrack, said: “The immediate impact is likely to be a fall in housing turnover and a rapid deceleration in house price growth as buyers wait and see how the economy is affected.”
The Council of Mortgage Lenders is asking borrowers to keep calm.
“In the short term, people’s attention will be on interest rates and what impact this will have on mortgage costs. While markets are bound to react to the news, the question will be how long it takes for them to settle,” said a spokesman.
“In the medium term, there will also be interest in the extent to which housing transactions are affected by economic uncertainty, and whether this will impact on house prices. The more quickly markets resettle, the lower the impact on the housing market is likely to be. However, any prolonged disturbance would inevitably impact the housing market.”
Well that all sounds rather negative……and wrong. With a falling pound exports become less expensive and more competitive and imports more expensive. The Footsie has stabilised today and is at the same value as it was back in February and there has been a small recovery in the pound. If all you can see is the negative then that becomes a self fulfilling prophesy. This article seems to have been written by someone who panics at the first whiff of cordite. Get a grip!
Well said. Get a grip and get the basic facts correct before going into print!
Such negativity, following months of pre-referendum scaremongering from Osborne who is still continuing the same line, simply adds fuel to a fire that would, ordinarily, die down.
Thank you for your support of my comments.
From the few comments above it would seem the consensus is that being positive is the best approach. I am investing in another property with no particular concerns. The market has gone up and down for as long as I can remember and I am pretty old in the tooth now.
Dear Malcolm, I am a property investor and i had booked a viewing to consider a purchase of a property this week. I cancelled the appointment this morning because of Brexit and uncertainty in the UK market. Just remember this is when Uk has not yet left EU .Hard times are ahead as many economist and not politicians predicted that!!!
My question to you is would buy a property in current situation.If your answer is no then you are as realistic as the rest of us investors.
Thank you for taking the time to comment on my post, you are obviously a supporter of remain which I respect but disagree. To answer your question about whether I would buy another investment property, the answer would be yes, but after we extricate ourselves from the EU. My concern has been that the EU increasingly drafts our laws (60% at the last count with very little scrutiny by Parliament) which includes all the governance of the state but particularly in financial matters. Both the FCA (a limited company) and its predecessor the FSA implement EU rules. For example, the Mortgage Credit Directive is an EU framework of conduct rules for mortgage firms and was implemented by the FCA on 21st March 2016. This is typical of the ‘one size fits all’ approach of the EU and is not necessarily best for the UK, not forgetting that EU law takes precedence over our own laws. To give you some background, I have a portfolio of properties in South Wales and have been in this business for 35 years.
I am about to exchange contracts on Friday on a property that has taken months to secure, but as Friday approaches and I read so many different things on forums and news reports I hear I don’t know if to completely drop out or not listen to the hype and bite the bullet as it appears nobody knows what is going to happen …… currently confused !
Exchange don’t be scared
I’m in the middle of buying 2 properties now was originally one but someone dropped out of the other due to eu
So got it cheap enough, theres always people trying to scary everyone.
I listed a property last week for rental and was rented within 24 hours and being truthful wasn’t the best house or best area.
Another house has since sold after the eu. If you get the right house in right area and do it up well, they will still sell or rent whatever you prefer.
The BTL Mortages that are changing don’t affect me in slightest as I certainly wouldn’t be as tight as som people in the country seem to be need min 10% Yield otherwise why waste your time money and effort