BREXIT - The Managing Director's view

June 28th 2016
By: Mary.Wilkins
BREXIT - The Managing Director's view

Currently we’re in a period where we are suffering from a double if not triple whammy as we face the far reaching consequences of the voters’ choice to leave the European Union.

The immediate effects of leaving the EU, and the instability caused by a departing Prime Minister, together with the unsettled situation within the opposition party, could best be described as a level of turmoil.

Clearly this is an ever moving picture with both the markets and lending rates potentially being in flux.  I do believe short term uncertainty is the issue, leaving some people worrying about the economy and their jobs.  There is an age old adage that you want to be selling when everybody is buying and buying when everybody is selling and this could well be the case at the moment.

Fundamentally, as in any market, the property market is made up of supply and demand.  The imbalance of lack of supply has not gone away, quite simply we’re not building enough new homes and have not been for decades.

I’m afraid the process of leaving the EU will take time and only once we’ve served Article 50 does the two year period to negotiate the terms start to come into play.  So my prediction is that there will be some volatility in the markets in the short term, but this could be short-lived.

Currently the UK 10 year borrowing rate is around 1.1% and this indicates to me that mortgage rates are not going up any time soon.  In fact only last week one lender offered 0.99% fixed for two years.  We also have the attraction that if the pound is devalued, overseas investors will see the UK as a more attractive proposition.

So I believe the property market will be business as usual, leaving opportunities to purchase keenly priced properties for a short period at least.

Christopher Lines
Managing Director