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The Great Referendum Debate

Many column inches have been dedicated to the what if’s, buts and maybes of a potential Brexit, so we thought we’d step in and share our thoughts on what we could expect post the EU referendum on the 23rd June 2016.

Many column inches have been dedicated to the what if’s, buts and maybes of a potential Brexit, so we thought we’d step in and share our thoughts on what we could expect post the EU referendum on the 23rd June 2016.

£1million and below purchases continue...

Recently we have started to experience an increased level of enquiries from Sales applicants who have said they’ll begin their property search in earnest, post-referendum. Indeed, we have already agreed 3 sales in the past week below £1,000,000. Those purchasing within this value bracket are fairly pragmatic in outlook and are less anxious about what the actual result will be. Many have suggested that they are just looking for certainty on the matter and will be willing to commit to a purchase once the situation is clarified.  Our view is that these clients are buying for personal reasons, always an essential core to a fluid market, and this won’t change due to either an In or Out result.

Brexit - the opportunists dream?

Whilst some may see uncertainty and instability within the property market and hedge their bets, others see an opportunity. Our sense is that Buyers will perceive an ‘Out’ vote as an opportunity to buy property at a discount. This will primarily be driven by major international firms relocating their headquarters outside of the UK in the wake of Brexit, with a whole raft of highly-paid executives following suit. This could result in lower demand for high-end property, particularly in London and the south east, fuelling price reductions already underway. To this end, the Treasury is predicting an Out vote would result in reduced economic prosperity and security. Even George Osborne has gotten in on the act and predicted an 18% reduction in property prices should we leave.

This position, combined with the already disastrous effect that the increases in SDLT has had on the ‘high-end’ UK property market, may mean that it will be sensible to undertake a property valuation review in order to ensure competitive prices, which are based on comparable properties being offered to the market. The upshot is an opportunist purchaser could potentially bag a bargain, but it will be at the cost of the seller.

Will remain mean an Indian summer?

In the event we vote to stay ‘In’, we could see a very vibrant summer market. This belief is driven by the fact that many applicants have been delaying their decision to purchase (which widely supports the dramatic fall in transactions over the past 6 months) due to the uncertainty. But, should we remain, there are additional factors which could indicate a bumper summer ahead. The IMF has gone on record to say a vote to remain in the EU would lead to growth rebounding in the latter half of the year, not just within the UK, also across Europe. This could have a huge impact on the London property market, with a massive boost in both confidence and cash on the streets come the 24th June.  This increased level (or at the very least sustained) of capital coming into London and the UK can only strengthen the pound and in turn have a positive effect on property prices once more. There is also the need to factor the impact of a remain vote will have on the construction industry, with skilled workers remaining and with the trend of renovating and extending likely to continue, it’s an important influence on the property market.

So what do I think?

What’s clear from all of this is that no one, with any degree of certainty, can actually predict what will happen. Whilst all of the press coverage is making the vote seem like a very big deal, it’s worth bearing in mind that the property market is hardly going to collapse either way.

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