Last Wednesday saw Theresa May trigger Article 50, kick-starting the process of leaving the EU. The impact on Britain’s housing market is still uncertain, but it is suggested that the effect of Brexit will largely depend on the speed and success of negotiations.
Last year’s vote contributed to a vast amount of uncertainty in the London property market, causing house price growth to slow, and purchasing to fall. UK housing transactions in the second half of 2016 were 9% down on the same period in 2015, according to figures from HM Revenue & Customs.
Speaking to the Financial Times this week Lucian Cook, director of residential research at Savills, said he believed the effect of Article 50 will depend on subsequent negotiations and what impact that has on buyer and seller sentiment.
Cook argues that if the EU is open to constructive negotiations, the impact on sentiment will be limited to a mild caution, whereas a combative stance would risk restricting activity to buyers and sellers who really need to move.
As expected, he predicts that a higher level of caution will be exercised in the capital, given that buying a home in London is a larger financial commitment than elsewhere in the country.
In a broader sense, it seems that the housing market has actually held up much better than feared. Nancy Curtin, Chief Investment Officer at Close Brothers Asset Management told Forbes this week that the fall in sterling is actually bringing some economic upside and stimulating a much-awaited re-balancing of the economy.
However, Curtin also points out that with inflation on the increase and the pound reaching a high against the dollar, it’s unclear how long this positive backdrop will continue.
In this climate of uncertainty, Cook believes that London’s real estate market at least will continue to fluctuate for some time.
Nevertheless, the medium-term seems relatively resilient, with Savills forecasting a 21% increase in prime central London prices between 2017 and 2021, and a 15% rise in prime outer London.
So for now, perhaps it is business as usual for the property market. However, time will tell – watch this space.