It won’t be a surprise that it’s been a testing couple of weeks for London property. Tenants, buyers and indeed sellers have gone “a little quiet” to quote an understated fellow West Hampstead estate agent.
The post-referendum market feels very unnerved by the decision to leave the EU. Commercial property funds have been closing their doors, house builders’ shares have seen big falls and locally there are examples of buyers pulling out of purchases or re-negotiating the price.
This is of course all a fairly predictable outcome given the result of the referendum. After all the prime minster predicted house price drops of up to 20%, which was never going to instil confidence in a market already starting to feel a change in the wind. As it happens, we haven’t seen anything like 20% falls and most buyers are proceeding with fairly modest single figure percentage discounts at most.
The outcome of the referendum has been the catalyst, crystallising changes in the market that were already taking root. Stamp duty increases and the removal of mortgage interest relief were already putting downward pressure on prices, which of course was the intention of these policies in the first place. So no bad thing there, at least for the first-time buyers who are the intended beneficiaries.
However, Brexit uncertainty has potentially so many more wide-reaching consequences. How it will affect the property market in London is unknown. Only when the exit route is laid out and we have some idea what an independent UK will look like, will we be able to predict the impact on demand, supply, house prices, rents, housing policy and so on. Until then there will be a lot of questions on people’s minds: Is now the time to move? I was thinking of upgrading, is now the time to get a bigger mortgage? Is now the time to sell my investment flat? Are prices going to fall further?
What is certain is that it is uncertainty causing the problems. The route to EU exit is pretty unclear and there is no one at the helm. In time this will change, a new prime minister, and perhaps a new government, will take control, the fog will gradually clear and the market will find its feet.
The good news is that many young people still place huge importance on buying their first home. This week, we agreed the sale of a one-bedroom flat in NW6, at the asking price, to a first-time buyer who is very excited at the prospect of owning her first home–a desire too strong to be eroded by current economic and political uncertainty.
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