As I sit and write this piece, even with the FTSE 100 back up and sterling having recovered some of its initial losses, it still feels like a tumultuous time for both the UK economy as a whole and the position of this country within the world.
With each day that passes we are slowly getting some answers to the post-EU referendum questions that have been thrown up by the vote to Leave. But it is clear that some of the bigger issues simply won’t be resolved for months to come. Not least when might we invoke Article 50, what relationship the UK might go on to seek with the single market, and what other EU member states will be willing to agree to.
Add in the political machinations, with both main parties battling it out in a leadership struggle, and you can see why certainty about the UK economy is not exactly at an all-time high.
At least there appears to be some people in power who have a plan, and despite all the opprobrium that has been thrown at the Governor of the Bank of England, Mark Carney, I have found his pronouncements - both immediately after the vote and the following week - to be welcome, providing a dose of reality and certainty to proceedings. Thankfully, it appears the Bank of England and the MPC took the threat of a vote to leave seriously, and they have been able to outline a structured approach designed to support both the economy and the markets.
Admittedly, the vote to Leave was not one either I or the SDL Group wanted, as we were enjoying a relatively stable period. However, now that the decision has been made – and the frontrunners for the Conservative Party leadership have agreed that the people’s will should be implemented – we are keen to make the best of the situation and ensure we continue to support our customers/clients to help them make the right decisions.
It is too early to say how the UK’s property market might be impacted, and I suspect it will be many months before we will see the full trend, but anecdotally at least we have heard of businesses who have decided to wait out this period before making any big decisions. In the mortgage market too, lenders seem to be adopting a cautious approach and we have already witnessed a number pulling back on their higher LTV lending in order to ensure customers are not over-borrowing in what might be a falling market.
For those, pre-referendum, who suggested a fall in house prices would be good for the first-time buyer market I might suggest they keep lenders in mind before making the same assertion. It was fairly obvious that first-timers’ ability to secure mortgage finance and save for a deposit would be the biggest obstacles in their way, regardless of a fall in prices. Indeed, with Help to Buy 2 coming to an end this year, first-timers’ ability to get on the housing ladder may be further compromised because lenders look like they do not have a great appetite for high LTV loans – those mortgages mostly favoured and needed by first-timers. This doesn’t appear to be a market where the position of potential first-time buyers is going to change a great deal.
That said, I am positive about the future for the UK property market and agents’ position within it. Understandably, many will be waiting to see how the next few months unfold before making big financial decisions on purchasing or selling homes, but one suspects that once the summer is over, and we have a new Prime Minister in place, the new-found stability and the fact that plans for Brexit should have firmed up considerably by then, should deliver vital confidence to the market.
I also don’t foresee the big price falls some were predicting pre-vote. There may well be fewer transactions over the short-term but the fundamentals underpinning the market have not changed – we are still not building enough homes in this country, and with relatively strong demand one can’t imagine big drops in house prices. Also, and this is a very important point, while UK mortgage lenders might not be so enamoured of the high LTV market, they do have funds and want to lend, so those with equity or bigger deposits are going to find they have an increasingly competitive marketplace to shop in throughout 2016.
Overall, these are the cards we have been dealt, and despite some short-term pain and uncertainty, my view is that the UK property market remains on solid foundations and will continue to perform strongly in the medium to long-term.
Rob Clifford is a CEO of CENTURY 21 UK, part of the SDL Group