On Friday, we launched our Property Clinic to help answer your questions and concerns on the referendum outcome to leave the European Union. One of the commonly asked questions so far has been, unsurprisingly, "will the out vote affect my house price?". Here's our immediate response:
It is not considered that the forecast of significant price reductions due to the results of the Leave referendum are realistic.
The Brexit vote may hit transactions, as buyers and sellers wait for the dust to settle but we do not expect significant house price falls.
There may well be considerable uncertainty as a result of the referendum decision. This will affect the sentiment and reduce activity below levels that would otherwise be expected in the near term as both buyers and sellers adopt a wait and see attitude.
The general remit is that the downturn in transactions may not be dramatic but might be protracted. It could well be that the London market experiences more volatility, due to the over-heated nature of the property market in the capital, whilst the market outside of London could be more stable. In the last few days we have seen the value of the pound fall and, in the very short term, this could well see foreign investors speculatively enter the UK property market. Indeed, property investment will continue to be a safer option than stocks and shares in the medium to long term. The number of properties available to buy, compared to continued strong demand, will no doubt solidify market conditions and Brexit could simply be a bump in the road.
Affordability has recently become more stretched for both first time buyers and home movers. This is not surprising comparing wage growth to house price inflation which has been outpacing earnings for some 41 months. The Bank of England have suggested that they will inject money into the economy should Brexit affect the UK economy detrimentally, and this should give movers the re-assurance that the low interest rate environment will continue for the foreseeable future.
To summarise it is very early days following the Brexit outcome and there is likely to be uncertainty for the next 3 months both economically and politically, however the overall outlook for the housing market is very positive for the reasons already given above.
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