Have Brexit housing market fears been overstated?

It feels much longer, but it is two months to the day since the British electorate voted in their droves across the country in the European Union referendum.

In the run-up to the vote, the doom-mongers predicted panic in the event of the Brexit camp emerging victorious. But so far, although it is early days, Britain's economy and housing market seem to be ticking along quite nicely.

Last week the latest UK retail sales figures suggested consumers haven't been too ruffled by the Brexit vote. The volume of retail sales rose by a monthly 1.4 per cent in July, which was well above consensus expectation of a 0.1 per cent rise - reversing June's 0.9 per cent month-on-month fall.

On the housing market front it appears to be business as usual, so far at least, despite speculation that political uncertainty surrounding Brexit would rattle homebuyers' nerves.

SOFTENING STANCES

Some surveys have suggested the market is starting to cool, but overall house prices are holding up better than most had predicted.

Pre-Brexit, gloomy commentators had forecast house price falls of 20 per cent plus. Two months on from Brexit these fears do seem extreme, and various commentators have been softening their stance.

According to UBS Wealth Management a worst-case scenario is a decline of 5 per cent by the end of 2016. Countrywide, Britain's biggest estate agent, has also pencilled in a modest decline, predicting nationwide falls of 1 per cent.

The housebuilders, whose shares were hammered in the first couple of trading sessions following the Brexit vote, insist it has so far largely been businesses as usual.

Persimmon, the biggest UK housebuilder by volume, on Tuesday told the market that 'customer demand remains encouraging and we anticipate a good autumn sales season'.

The group reported a 29 per cent increase in first-half profits to the end of June.

Persimmon chairman Nicholas Wrigley commented: 'After a modest increase in the week following the referendum result, cancellations have returned to normal levels and are currently running slightly lower than the same period last year.'

HOUSE PRICE CRASH UNLIKELY

Next year, however, will be the true acid test for the property market, once Article 50 is triggered and firms, particularly businesses in the financial sector, decide whether to relocate or stay in a post-Brexit London.

Either way, my money is on a rise in unemployment and at best anaemic wage growth hitting consumer confidence. Prospective first-time buyers may therefore think twice, reducing demand.

A recession could also be on the cards in 2017, which could cause banks to tighten their lending belts.

But I cannot see Britain's love affair with property ending post-Brexit.

As a first-time buyer myself, sky-high property prices frighten me, but I am not going to wait a couple of years and pray the market collapses, particularly when my mortgage payments are going to be less than my previous rent for a smaller property.

This may be a crude measure but I think other first-time buyers will have a similar mindset, and housebuilders will continue to see a greater number of buyers than sellers, which will in turn push up demand for homes.

If this scenario plays out, a house price crash will not be hitting our shores anytime soon, particularly when the government has various supportive measures in place to help house buyers.

In addition, a shortage of housing supply will not be going away post-Brexit; until this is addressed and more homes are built, house prices should remain well supported.

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