Brexit – Any Effect So Far?
Despite all the efforts of the media to plunge the nation into panic, recession, doom and gloom, the subsequent results of the June 23rd Referendum have yet to have any effect on our property market
In the last 3 weeks, we have continued to register new buyers and agree sales.
Here are just some of the properties under offer since 23rd June.
Most of us will remember the last property recession that started in September 2007. The collapse of a number of banks in America and the UK, saw property prices crash by as much as 35% in just 18 months. The cause? Irresponsible lending.
Some of us will remember the property recession in 1988, which lasted nearly 7 years. The cause? The boom and bust economy, the end of double tax relief on mortgages and mortgage rates increasing from 8% to 15% in just 3 months. The property market was over supplied and so prices dropped.
What influences could cause another property recession? The increase in mortgage rates. Is this really going to happen when the Bank of England have already announced that they will react to support the economy by REDUCING interest rates. I don’t think so.
An over supply of properties to the market? As an agent, I would love to have more choice on my available list of properties. But, again, people are just not moving as frequently as they used to. Mortgage rates are low, so very few people are forced to sell for financial reasons, unlike 1988. So, I don’t predict the supply of properties for sale increasing. In fact, they will probably decrease as sellers wait to see what happens to the economy following Brexit. If supply diminishes further, this could cause prices to rise further.
Thats what we have been hearing and reading for the last few weeks. Since David Cameron announced his resignation, we thought nothing would happen to the government until October. How wrong we were! Our government have reacted with speed and efficiency, whilst the opposition have dithered around.
We have a new Prime Minister and cabinet. `They have demonstrated they have the will and purpose to make sure the transition is as smooth as possible. New trade agreements will start to be negotiated, so that our economy does not slip into recession.
Whatever are thoughts on the EU were, whatever our political persuasions are, the nation has voted to leave. So, we can either put our lives on hold and wait for something to happen. We can moan and become depressed. Or, we get on with it. Isn’t that what our nation is good at? Lets make the most of what we have. Lets use our skills, whatever they may be, and keep our country on the right path out of recession and continue the work we have all contributed to since 2007.
Obviously I don’t want the property market to stagnate, falter and enter recession. I earn a living from selling and renting houses. A property recession is not only bad for all estate agents, its bad for the country. So much industry is related to the housing market from building new homes, to renovating old ones, from DIY to fitting flooring, landscaping a garden to buying new patio furniture. I am convinced that the government will go to extraordinary lengths to prevent a property recession.
Here’s where I put my neck on the line
We are starting the summer holidays. August is normally the second worst month for us. December being the worst. That’s been the way of the industry for the past 30 years that I’ve been involved.
So, we await September’s arrival with excitement and nervousness. I believe that the level of transactions will be determined by the number of new instructions coming to the market. As a consumer, we want choice – whatever we are buying. If new instructions are low, as predicted by the Royal Institute of Chartered Surveyors, then sales will not be at the levels we’ve seen earlier in the year. BUT, I do not predict that prices will fall.
We have been used to marketing a new instruction and arranging upto 20 viewings in the first two weeks and fielding between 5 to 10 offers. A bidding war ensued with the successful application having to pay over the asking price to secure the property. Unless you have a “special” property in a “desirable” location, this probably won’t happen again this year. Is that a bad thing? To the seller – yes, but not to those buyers serious about securing their next home. So the market will return to normality.
I predict that the “savvy” seller, will go to the market to achieve the best price, as they think prices will be lower in 2017. The full effect of Brexit won’t hit us until 2017, where I think prices will be a little lower than this year, but not by the 10-18% predicted by a number of organisations. If we have a good level of new instructions, buyers will be delighted. They will have more choice and relish the opportunity to find the right house for them, not the best compromise.
Lets review the market in November and see how close my predictions are