Since the UK voted to leave the EU there has been much speculation about how the property market will be affected in the months to come. Although still early days, we take a look at the activity we’ve seen over the past month or so and what the next six months may look like.
Selling
Enquiries from buyers have remained at a healthy level. Buyer motivation is also strong given the competitive lending rates and general demand caused by under supply, however, it must be recognised that political developments may cause ongoing disturbance to the normal negotiation process. Undoubtedly, some have looked to take advantage of the uncertainty by renegotiating offers. There are sellers who have crumbled but equally there are sellers who have stood firm, and with the benefit of backup buyers, have been rewarded by their insistence on maintaining the sale at the agreed price.
We have seen an increase in international enquiries due to the weak pound. Investor enquiries are also up as we recover from the lull caused by the tax change bubble in the spring and start to reap the reward of improving lending rates coupled with few other places where money is safe.
Letting
Lettings volumes are very strong both in terms of new enquiries and rising rents following the oversupply in the late spring. The only potential exception to this would be the international relocation market which is unsurprisingly a little soft currently.
What about the commercial market?
Smaller commercial property is still being sold at pre-vote prices. Deals on larger units with motivated buyers and sellers have also come to a conclusion quicker. Whilst there are good deals still to be had, opportunists appear to have been disappointed as commercial freeholders are more aware of the risks and are looking to let and hold onto their prime assets.
According to the latest BMO report on a sector by sector basis:
- Industrial is relatively resilient with many deals proceeding at pre-referendum levels. Elsewhere in the sector, prices may have moved slightly lower
- Prime high street retail remains robust – no real impact
- Good institutional retail is recording a small decline
- For offices, the impact is too early to advise but possibly there could be a larger short-term adjustment
Our own data suggests there has been little change in leasing on industrial space and the majority is going through at pre-Brexit levels. Office space transactions have been at record levels, with similar indications in retail where prime sites are still very sought-after.
The future
Although a property crash has been avoided, as the government goes through the process of leaving the EU it remains to be seen whether the UK property market will continue its trajectory of pre-Brexit price growth. For now as we look towards the autumn market, we feel confident that the underlying fundamentals of the market will remain strong as home-buyers take advantage of the Bank of England’s stimulus package to cut interest rates and help increase lending to both customers and businesses.
Correct at time of publication. The views and opinions expressed herein are those of the individual contributor and do not necessarily reflect those of the Chancellors Group of Estate Agents Ltd or its subsidiaries. References to legislation, best practice and other matters with legal implications such as fees, rules and processes are included for information and editorial purposes only and are not authoritative, nor should they be interpreted as advice. When in doubt you should only take advice from an industry professional or solicitor where appropriate. E&OE.
