Brexit Referendum And The Predicted Impact On The Property Market

This month we are of course discussing the EU Brexit referendum and that the UK is out.

Whilst there seems to be panic setting in, let’s look at the facts as they stand at the time of recording rather than getting embroiled in the current media frenzy. Both the EU and the UK want to get the withdrawal right, that’s a fact. This is in both of our interests as we both equally stand to lose and gain in equal measure.

Only the UK can invoke article 50 and not the EU so in other words, any withdrawal is done on our timeframe and when we are ready. The Bank of England and Chancellor George Osbourne have already said they will do whatever it takes to keep the market stable and again that’s in everyone’s best interest.

There’s been £250 billion worth of funds set aside should we ever need to use it. On top of that we’ve got low stable inflation and fairly solid employment rates. Research out the other morning from Coutts bank shows that most political events do not have a lasting impact on investment outlook, and they, Coutts, do not see Brexit as an exception. Coutts also went on to say that one of the more reliable warning signs for a big downturn in the market is the risk of a US recession, which is seen as very unlikely in the next 12-18 months.

The result is of course a surprise to many, especially the city who were betting the other way. We all knew the result would be close. The financial markets are currently going through an adjustment, to find their new levels, and there was always going to be some initial short-term turbulence. We must remember that the bottom line is that there will be a lengthy renegotiation process and it’s not a case of just flicking a switch one day and getting a new set of circumstances the next.

This is going to be a very gradual process over a minimum of 2 years. So therefore, on the property side, my advice is hold your nerve. Yes, there is financial turbulence occurring currently, but this was always going to be the case. There’s already speculation that Bank of England reducing interest rates to quarter of a percent and if they do this mortgage rates could be cheaper. If so, it will mean greater property market activity as money is cheap to borrow. The property market relies on supply and demand and people will always need to buy and sell property.

Current local property supply levels remain weak and therefore there is an argument for property prices locally to hold firm. The underlying strengths of the UK economy remain in place and property is always being proven to be the best medium to long-term investment you can make.

So, in conclusion on the Brexit referendum, take your time, hold your nerve and above all don’t panic.