Effect on the UK residential market.
The greatest way to bring a halt to a balanced healthy Residential market is to create uncertainty. Notice how things tend to stop when there is an election called, a bad outcome of balance of trade figures, any political or economic uncertainty? WELL, Brexit is all of these factors hitting us at the same time and then in as an exponential magnification, reflecting on the market.
Turnover in central London has all but stopped. Values across the board are down from 5% to over 10% depending on the postcode. All issues such as cross rail and local matters sympathetic to specific areas are now only able to impact on markets by limiting the extent of the downward trend in values. Out of London there are hotspots such as Manchester and Liverpool where certain markets remain buoyant, such as student accommodation, low cost housing to service the growing population etc, but there is no expected growth in these locations for years to come.
A key driver of pricing apart from confidence is also population growth. Did you know that post Brexit we had over a 90% drop in immigration. This could well be the unseen elephant in the room affecting our market for decades. With our natural birth rates in decline since a peak of 2008 (source CSO; Ireland) immigration is needed to keep demand high relative to supply, to create growth , why? Because they are not making any more land!
Opportunities are created by way of foreign investment with speculators forecast to assist in net absorption taking advantage of historic low prices and a weak exchange rate but how far can this go to underwriting our market? Interest rates are historically low and there is also the added impact of new home buyers entering the market taking advantage of low borrowing rates and lower levels of pricing.
Based on Quadrin research we are of the view that it will be a buyers market for the short to medium term.
Rob Bath – Partner Quadrin Valuations