The credit crunch may have been the economic backdrop against which much of the housing market performance of the past 10 years has been seen - and Brexit is likely to do the same thing for the next decade, says Savills.
Lucian Cook, the agency’s director of residential research says it remains too early to know precisely how the decision to quit the EU will plat out but he says “few would bet against a drag on house prices, debt availability and transaction levels.”
The most obvious effects would be felt in London and, nationally, on the delivery of new homes to meet burgeoning demand.
In a briefing ahead of next week’s annual RESI conference, Cook says government intervention such as Help to Buy will assume heightened importance in the delivery of new housing in the short to medium term.
“Given the potential of construction and housebuilding to help stimulate the economy, more will need to be done around bringing forward infrastructure, freeing up development finance and meeting demand across a wide range of tenures” he says.
In a separate report, Cook - widely regarded as one of the leading residential analysts and most successful forecasters of the British market in recent years - says one likely effect of the Brexit result is on sentiment “which is likely to weaken buyers’ resolve to commit to a purchase.”
He says that this will potentially result in an initial drop in transaction numbers and a drag on house price growth, while longer term transactions depend on longer term economic consequences and banks’ willingness to lend.
In addition to a squeeze on buyers’ affordability from reduced wage growth and higher inflation, mitigated in part by low interest rates, “we believe mortgage lenders may ... take a more cautious approach to lending by tightening their loan to value and loan to income ratios among mortgaged owner occupiers” suggests Cook.
“Accordingly, there’s a chance that first time buyers and others on the lower rungs of the housing ladder will find it increasingly difficult to access the market, especially in London” he warns.