So, the big decision has been made and its one that 51.8% of voters who voted to exit the EU should be happy with. Whilst we at Rolfe East are keeping firmly in the middle, it seems that those playing on the right-wing are delighted that we’re out of the ‘left-wing European superstate’, while those playing on the left-wing are complaining that the right-wingers have taken now taken over possession of the ball.
With regards to the economy, stagflation (high inflation combined with higher unemployment and stagnant demand) may well be the outcome but in these circumstances the wise money always finds its way into investing in assets, especially property. However, and unfortunately, the people most affected right now by the exit news will be the likes of the former Tata steelworkers who, we hear, may be about to lose a potential buyer.
But how will the decision affect the property market? The property market is always sentiment driven, which should be positive, and the Bank of England has already stated that it will support lending and hinted at freezing or even cutting rates. What we may see happen with fixed lending rates may be an indication and this will further support the market.
Although the pound has been hit, and is likely to be weakened for some time, it will not effect the UK property market; unless you are foreign investor who bought in earlier and wishes to cash out now. However, as the pound falls a large flock of foreign investors are already circling London’s prime areas. In fact, property press today cites cases of foreign buyers jumping in to replace jittery UK purchasers. This rather emphasises the point.
Immigration was a factor that was high on the campaign agenda, and it is something that everyone accepts we must have; we need more people at work to pay for all the needs, financial and otherwise for the ageing population. The only question will be from where the immigration comes; remembering that half currently comes from the rest of the world rather than the EU. Ultimately, and importantly, these people will still all need housing and that requires new property more than ever.
The fact is, despite a short-term sentiment whilst we find our new direction, the cost of money, as does stagflation, supports asset purchase and the Bank of England will support this lending for years to come.
It would be worth asking those who bought in c. 2009-10, in order to be reminded just how well they did during a time of a financial (no money) ‘crisis’. This was far more real than the political uncertainty we find ourselves in now and, like most feelings, we are sure we'll get over it soon!