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Three months on – which way is the Brexit wind blowing?

Those working within the UK housing market would have felt considerable worry about the immediate impact of the vote to leave the EU, and what it could do to the key areas of demand/supply, interest rate levels, ongoing property chains and client sentiment.

Now, after three post-referendum months, you will already have your own take on how the market as well as your business has fared throughout the rest of the summer and into September. 

Perhaps you will have greater confidence that predictions of a ‘crash’ will remain unfulfilled, or maybe you are sensing that those involved in ‘Project Fear’ are not likely to be right but that doesn’t stop some major obstacles from coming in the way.

First, let’s focus on the positives. Talking to our agents it’s clear that in the weeks following the referendum result, clients took stock of their own position in the market. 

Certainly, we had to respond to this and there were re-negotiations on pricing from both vendors and potential purchasers in order to reach a new normal. 

Listings too may have seen a drop-off, but you would not consider them to have fallen by catastrophic levels.

Since then, though, across the majority of our offices, we have started to see a return to pre-referendum levels of activity. 

With areas of London in particular, the fall in the pound has precipitated greater interest from overseas buyers who are tempted by the potential for a bargain. 

Of course, many agents across the country won’t have the luxury of this clientele. 

However, we are also aware of interest growing, particularly amongst buy-to-let landlords, in areas outside London and the South East, as they seek to grow portfolios and secure the rental yields that may simply not be available to them in areas where they have historically been active.

Of course, we have all been waiting for the monthly data and research which can help to provide a snapshot of the UK housing market. 

There is a mixed bag of news judging by recent statistics, while there has been something of an impact it has not been as debilitating as some feared. 

Recent mortgage figures from the British Bankers’ Association for July – the first full month after the referendum – showed that year-on-year borrowing was up 6%, sitting at £12.6 billion. 

‘Brexit has not hit borrower demand’ was the headline to accompany these stats, albeit let’s not shy away from the fact that approval of home purchases during July was 19% down on the same month in 2015.

There was a complementary picture painted by the CML’s latest figures for July backing up the fall in both loan numbers and lending. 

It said that £10.6 billion was borrowed in July – 13% less than the previous month, and the number of loans dropped by 14% to 58,100. 

One might suggest that, due to a number of changes, we are seeing something of a rebalancing act taking place in the market. 

The first quarter of the year favoured buy-to-let landlords as they sought to purchase before the stamp duty increases kicked in, while since then first-timers appear to have benefited from less activity in the private rental sector. 

Figures from the CML for quarter two this year recently revealed that £3 billion was borrowed by first-time buyers, up 3% on quarter one and 10% compared to the second quarter of 2015. 

Of course, we can’t discount the impact to our market that might be felt by the recent cut to Bank Base Rate and the incentives to lenders to keep lending.  

This may not just provide real impetus to the remortgage market but might also tempt in more first-time buyers with highly competitive rates, plus it might act as the catalyst for existing homeowners to look at up or down-sizing. 

These are all potential clients for agents and we would do well to look at where the market activity appears to be, and is likely to head, before concentrating on those client groups.

Overall, we might all wish we knew which way the Brexit wind was likely to blow in the months as well as years ahead, but given that we appear quite far away from even invoking Article 50, it’s still impossible to say. 

To that end, we might keep one eye on the longer game, and prepare for all eventualities, but in the short-term we have to develop our propositions as the market changes. 

It appears that different buyer demographics are being favoured and we can therefore focus our resources here, with the understanding that flexibility and the highest of service standards will never go out of fashion.

*Rob Clifford is a CEO of CENTURY 21 UK, part of the SDL Group

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