Britain’s vote to leave the European Union will mean the property market flat lines over the rest of 2016 followed by price falls to around 2018.
That was the “best case scenario” predicted by estate agency JLL in the aftermath of last Thursday’s referendum. However, not every property business is so sure.
Haart estate agency believes last week’s result to be a “huge opportunity” for the country, offering a glimmer of hope to those with cash sunk in bricks and mortar.
JLL head of residential research Adam Challis said: “The result brings an unprecedented new dawn for Britain, with considerable uncertainty over the likely impacts for the next few years.
“We expect an immediate slowdown in housing market transactions, in the order of 10%-15%, resulting in downward pressure on prices for at least a couple of years. We anticipate current activity levels will return but this is unlikely before late in 2018.
“Price growth will be flat over 2016, reversing gains from the first half of the year, while our central expectations of price falls between 3% and 5% in 2017 and 2018 are based on the best case scenario of a relatively orderly adjustment to our new political realities.”
JLL also called on the Government to shore up the economy and do their best to push through new agreements quickly.
Adam said: “It is crucial that UK politicians and civil servants push hard to regain transparency early on over the terms of our trading relationships with key EU partners.
“The housing market relies on confidence in the jobs market, coupled with access to a competitively priced mortgage market. The Vote Leave result will drag on new business investment and curtail new employment activity.
“Many sectors, from manufacturing to financial services and biosciences, will be forced to consider the implications of this result on trade and whether this has an impact on the UK as a base for operations.
“While there are still compelling reasons for companies to base their European operations in the UK, this business review process is likely to constrain investment and prolong employment uncertainty for many across the UK.
“Fortunately, the mortgage market has benefitted from the record low Bank of England base rate for the past seven years. This support will be welcome for many movers and will aid liquidity in the housing market during the next couple of years.
“The London housing market will feel the effects of the Vote Leave decision more deeply. The interconnected trading relationship between London and the rest of Europe means the implications are more complex.
“This will exacerbate the uncertainty for London’s homeowners. Paradoxically, investors may well identify opportunities in this market over the short-term due to the weak pound.”
However, Haart estate agency CEO Paul Smith said: “We’ve grasped a huge opportunity for the UK and we have every reason to be confident about the long-term success of the property market.
“The underlying strength of property is sound, and it will remain a great investment because more people than ever are looking to get on to the ladder and there simply aren’t enough homes available.
“Last month Haart saw 10 buyers chasing every property on the market and we know that around 80% of young renters want to buy a house.
“This equation won’t change any time soon. In the short term things could be turbulent as people come to terms with a result that wasn’t expected.
“But we now have some certainty. It’s up to the Government to lay out a clear timetable for renegotiation of our relationship with the EU so that we can get on with doing what British people are very good at – buying and selling houses.”
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