The people have spoken and the United Kingdom has decided they want to leave the European Union. The figures show that 16,141,241 (48.1%) voted to stay, with 17,410,742 (51.9%) voting to leave, an unexpected result according to the exit polls, which it must be said have often been wrong in the past.
Although the voting numbers are close, the regional split of the votes gives one of the best pictures of the sentiment of the country with the Remain campaign only winning in 3 out of the 12 regions, with 2 of these regions being Scotland & Northern Ireland, the other being London. With the majority of MPs favouring remain, this shows the disconnect the current government has with the population that resides outside of the M25 and the major metropolitan areas of England & Wales. So what next? If the claims made by the Remain campaign prove to be true, we are in for a bleak short-term future, however many people have branded these claims scaremongering and may be one of the reasons many chose to vote Leave.
What about property? Some experts have predicted that leaving the EU will have a negative effect on growth, and there have been extreme claims that prices could even fall. Since the vote the pound has dropped dramatically over the uncertainty in the market. House prices tend to move much slower and it will be months until we see the real effects on this asset class. Richard Donnell, insight director at Hometrack, says how “the immediate impact is likely to be a fall in housing turnover and a rapid deceleration in house price growth as buyers adopt a wait and see the short term impact on financial markets and the economy at large”. Mr Posniak, director of Dragonfly Property Finance, echoed Donnell’s thoughts but also said that investors “should not write off the market, despite the magnitude of the result, the structural supply issue underpinning the UK’s property market may well prevent prices falling materially. Overseas demand may also increase on the back of the decimated pound. For many overseas investors, buying British property just got cheaper”.
A likely possible scenario will be a slowdown in price growth, but not a fall. This may result in a great time for first time buyers looking to get on the market. With stalling prices and interest rates still low, it could be a great time to buy. A way of looking at the situation is like clothes shopping; everyone prefers to buy clothes in a sale rather than full price, but with property, when prices are slowing people become hesitant to buy. This is obviously a vague metaphor but shows that it could be a good time to get a property at a good price.
The truth is, nobody knows exactly what will happen next, and we probably won’t know for years as to whether the right decision was made. There have obviously been immediate effects with our currency, and there will undoubtedly be hesitancy in the property market. But it will be interesting to see if this is an extreme and temporary reaction to the results, or whether this is a long term trend of volatility.