“Baton down the hatches. Stockpile the food cupboard. Brexit is coming and it’s little more than six months away!”
I jest, but there is a point to be made here. Since David Cameron announced there’d be a referendum on our continued membership of the EU, the media in its many guises has obsessed with what each outcome could mean to UK Plc. Once the decision was made and Brexit became real, the ponderings escalated. Now, with just six months to go, there’s little more certainty than when we woke to the news on June 24 2016.
The thing is now, we’re just six months away. No deal has been struck and the jury is out as to whether the absence of a deal will be bad news or not. In short, we’re left wondering…Well, I say that, but in all reality, I do question if we’re just all a bit bored of Brexit?
That aside, for those of us in property it is prudent to consider what the coming six months and the aftermath may mean. We’re going to be asked and we’re going to be challenged and if you haven’t already considered your view, now is a pretty good time to do so.
For me, Brexit-apathy aside, I’m not worried. The property market works in cycles and we’re simply reaching the end of the current one. It’s happened before, and it’ll happen again. Properties are experiencing a natural buyer-led correction in pricing and that’s nothing to worry about. In recent times, practically non-existent interest rates held values up, but that was never going to last and we’re now simply going through what we all knew would happen eventually. It should come as no surprise and it certainly shouldn’t be attributed to Brexit. This is just a case of coincidence.
Don’t get me wrong, the uncertainty associated with our post-Brexit future will play on the minds of some and that uncertainty affects confidence. However, my instinct tells me that many people have lost any real interest in Brexit and the real issues are closer to home with price and affordability being the greater influences on their property decisions.
People aren’t going to stop wanting, indeed needing, a home. In contrast to many of our European neighbours, we are a nation of aspiring and actual homeowners and we want those homes to not only be worth as much as possible, but also to be realising price growth. That means that a realignment in the market, such as that we’re experiencing now, upsets us. It unsettles us. It’s easy to blame Brexit, but I’m afraid it is just the market operating the way it should.
Of course, I am not blind to the potential risk that a decline in confidence could have. It has already been knocked, but if something truly significant – a leadership contest, or worse still, a General Election - takes place in the coming six months, then the knock-on effect to economic confidence could be more marked.
That said, I truly believe that things are going to work out. A deal will be struck, and we will emerge the other side. Europe wants to agree a deal. We both, to an extent, need each other. Above all else, it would be political suicide not to and the Tories simply don’t want to jeopardise their already shaky position.
So yes, being six months away from Brexit without a deal agreed is a ridiculous situation to find ourselves in. It feels like we’re teetering on the edge of an unknown future. But don’t panic: it will work out and it’ll soon be business as usual once more with the property market bouncing back out the other side of its current cycle.
Remember, we’re 10 years on from what happened in 2008 – the low point that followed that was in February 2009 when average UK house prices stood at £155k. The most recent high point, in June 2018, saw average prices at £228k – an increase of no less than 47%. Let’s not forget that when the media does its utmost to convince us all otherwise!
*David Westgate is Group Chief Executive of Andrews Property Group