EU referendum result – property industry opinion

Posted 24 June 2016 by Keith Osborne

How has the UK's property industry reacted to the British public's vote to leave the EU? The WhatHouse? team finds out...

The result of yesterday’s EU referendum has shocked many and already led to a volatile reaction on the world’s economic markets and to David Cameron announcing his resignation. Here, we collate the reactions, thoughts and predictions of senior figures in the UK’s property industry.

Martin Walshe, head of residential at East Anglian estate agency Cheffins: “Now is the time to stop procrastinating, we know we are leaving the EU and our property market will soon return to its former strength. Both buyers and vendors waited with bated breath to hear the referendum result, and now that we know we are leaving the EU, those who have sat on the fence will be returning to the market in their droves. Whilst we will probably experience a short period of adjustment, the UK property market is incredibly resilient and investment in housing will remain a cornerstone of our market, whether we are a part of Europe or not. Despite 2016 being the year of the referendum, we have recently seen the best market ever experienced, and a Brexit will not affect this. Cambridge in particular will continue to be an international centre for innovation and education, and our booming market will return to its former strength. Residential markets have always been influenced by uncertainty and we are now entering an economic climate which has never been experienced before, so the only strategy is be back to business as usual and brace ourselves for the busy period which is to come.”

Chris Nelson, founding partner of developer eggHomes: “Being honest I would have preferred to stay within the EU as it is good for trade across member states and it would have avoided this period of uncertainty we’re heading in to. There will, without doubt, be an immediate financial impact, across all sectors of the construction industry. Perhaps long-term, once new trade deals and agreements are put in place with individual European countries, (this could take years) things should go back to normal and we could even be in a stronger position, but the immediate impact is a big gamble in my opinion.  From an eggHomes perspective we source the majority of our materials and workforce from as close to site as possible, with only a few specialist materials sourced from overseas. As a business we’re also governed by the World Trade Organisation, which operates in a similar manner to the EU, so from a business perspective we’re in a fairly strong position.”

Edward HeatonEdward Heaton, founder and managing director of property buying and search agent Heaton & Partners: “Regardless of individual sentiment about the outcome, there is no doubt that there will be international buyers who may initially give the London market a wide berth. This could be short lived if the pound drops dramatically, as London will suddenly look much better value to foreign buyers. There is a risk that with a period of uncertainty ahead of us, prices may drop off, but I believe that any fall will be limited and suggestions of a crash are overstated. The effect is most likely to be felt in London and the South East.”

John Elliott, managing director of Millwood Designer Homes: “I am delighted that today is ‘Independence Day’ for Britain, as the majority of the country has decided that a departure from the EU is best for our future. I am excited to get on with the New World and see the back of EU laws which have been detrimental to us for over 40 years. One of the UK’s biggest assets is our home-grown housing market and this will now be much better off out of EU regulation. Our exit from the EU will stop the continual flow of red tape and see our housing market grow and flourish without unnecessary constraints placed on building much needed new homes; working towards creating a better future for Britain.”

Martin Robinson, director of sales at Hunters Property Group: “The impact Brexit will have on the UK property market will be difficult to determine until the negotiations between the UK and EU are finalised. We expect some clients to pause to familiarise themselves with this news, but in the past we have found the UK property market has been very resilient against changes in legislation. At the end of the day, bricks and mortar will always be a good investment option in the UK.”

Russell QuirkChief executive of hybrid estate agent eMoov, Russell Quirk: “We don’t anticipate any tangible difference where the UK property market is concerned and the supply and demand balance that is currently dangerously out of kilter will see little sign of stabilising itself. Going forward the UK market will go from strength to strength, perhaps with wobbly knees at it emerges from the clutches of the EU, but it will soon find its feet again. Property values increased by 6% over the course of 2015 and we predict the same rate of growth by the end of 2016. Homeownership will remain far out of reach for the average UK citizen and the overwhelming swell of demand for property will remain despite our choice to leave the EU. This could, however, be the final nail in the coffin for the Prime Central London market, as the capital’s high-end properties have never been less desirable in the eyes of foreign investors. With demand having slumped to record lows over the last year, it’s not looking good for the capital’s property elite.”

Richard Donnell, insight director at Hometrack: “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. The decision to leave the EU will be most keenly felt in the London housing market which is fully valued and already facing headwinds. History shows that external shocks can reduce sales volumes by as much as 20% with sales volumes already down over the last year. House price growth is already weak and running in low single digits in central London areas and modest price falls now appear likely in higher value markets as prices adjust in the face of lower sales activity. Even a sharp fall in the sterling is unlikely to attract overseas buyers in the near term. Across London, where house price growth is running at 13%, we expect the rate of growth to slow rapidly on greater uncertainty and market activity in the capital is set to remain disrupted until consumers and the financial markets can see a clear strategy to manage the process to a position where the outlook for the economy, jobs and mortgage rates becomes clearer."

Graham Davidson, managing director of Manchester-based Sequre Property Investment: “The decision to leave is truly a once-in-a-lifetime decision and should now be embraced. The UK economy is going from strength to strength and the people of the UK have decided that now is the time for us to break away from the rest of Europe and gain back more control on our own future. Our economy continues to develop, particularly outside of London in light of the Northern Powerhouse agenda which is key to growth. Investment in Manchester over the past 12 months for example has been unprecedented and this month it was announced that MediaCityUK is set to double in size, with investment from UK companies creating thousands of new homes and job opportunities - a show of confidence in what we can achieve on our own. It’s safe to say The Northern Powerhouse agenda is well underway, and the referendum results being announced in Manchester’s town hall was testament to this. The reasons for investing in UK property won’t change, with returns still outperforming all other forms of investment.”

Nick Leeming, chairman at national estate agent Jackson-Stops & Staff: “Today’s Brexit announcement will likely have some severe short-term consequences on the property market as it adjusts to a period of uncertainty. We’ve already seen many would-be sellers put any decision to sell on-hold and now that a Brexit is confirmed we’ll likely see that indecision continue over the coming weeks. Both buyers and sellers will be waiting to see the effects and with the summer holidays now upon us, we can largely expect to have to wait until the new prime minister is appointed in October until we start to see any activity return. In the prime London markets, which have already been hit heavily by the introduction of the second homes tax, international investment may continue to decline following today’s news. Around the rest of the country however, activity has remained high over the past few weeks, with quality homes in good locations selling well. Many of the reasons to buy and sell are based on need – people move jobs, need to nearer to family or good schools – and these factors will continue to drive the market in the long term.”

Stuart Law, chief executive of investment company Assetz Property: “Today’s result to leave the EU has only increased the cloud of uncertainty cast over the British property market, but it is not the time to just sit back and watch the events unfold. Now is the time for buy-to-let investors to turn their attention away from the capital, which could experience difficult times ahead in terms of economic and currency uncertainty. Cash-rich investors should instead look to the Northern Powerhouse, which still remains a strong contender for those seeking to protect capital and produce an income well above bank interest rates. We still expect prime London prices to continue falling and many of the tens of thousands of luxury homes in the pipeline to be mothballed as demand from all over the world fails to meet that potential level of supply. The rest of London will definitely be hit by a perfect storm of several factors hitting house prices which is great news for house-buyers but not for investors and homeowners. The rest of the country, however, is likely to be far more stable and we expect house prices to be very slow to react, if at all, as a minor economic slow-down is balanced by low mortgage interest rates and huge demand for housing.”

Robin Paterson, joint chairman and chief executive of United Kingdom Sotheby’s International Realty: “The UK’s decision to leave the EU is an historic event and we should embrace this wholeheartedly. This opens new opportunities for investment, we may have fewer European investors in the coming months but we believe there will be significant inward investment from Asia, as well as from the US. Buyers from these regions will undoubtedly be looking to snap up bricks and mortar in the UK with the predicted fall in sterling. Regardless of Brexit, the peak of the market is behind us, both in the residential and commercial sector, and these changes will hopefully create a split market across the capital. Areas which are more reliant on EU buyers such as South Kensington and Angel may well see a price correction whilst others favoured by non-EU buyers will perform well. These price corrections are crucial to create churn in the market at all levels.”

Ged McPartlin, sales director at Manchester-based sales and lettings agency Ascend Properties: “While the initial shock might be hard to swallow for some, the reality is that Manchester’s economy has never been stronger – and will only continue to grow. The level of internal investment pouring into the city has reached many millions of pounds, spanning new homes, commercial ventures, offices and infrastructure. Manchester will also be seeing investment from China which will be going into Airport City, testament to the strength of the Northern Powerhouse. We are confident for the future.”

Ian Westerling​Ian Westerling, managing director of Humberts says: “The choice by the British public to leave EU will now be followed by lengthy negotiations as politicians thrash out what post-Europe looks like for Britain.  On the run-up to the referendum, the property market had certainly paused so we welcome the result and agitation it will stimulate in activity. We are also entering a busy time for ‘must movers’ who will be anxiously looking to move to suit their personal circumstances – upsizing, downsizing or moving for schools.  The drop in the value of the pound may attract overseas investors in the short term and it could well be that the UK will be seen as a stable haven whilst the European economies continue to falter. In the short term, there may be some pressures on pricing but we would anticipate that the property market in the areas we trade in will not be detrimentally impacted and, indeed, the long term picture looks exciting and full of opportunity.”

Naomi Heaton, chief executive of London Central Portfolio (LCP): "Prime Central London real estate is expected to benefit from a flight to quality and the security of blue-chip tangible assets, against a background of highly volatile financial markets. It is now likely that property prices in Prime Central London will increase. Whilst LCP had originally predicted that this would not occur until 2017, the signs are that the re-entry of investors into the market will be more rapid than originally expected. LCP have received a stream of enquiries from the early hours of this morning.”

Anil Varma, managing director of boutique developer HarrisonVarma: “As an employer, we are concerned for the welfare and peace of mind of our 150+ employees comprising 17 nationalities, including eight different European countries. It is extremely unhelpful that there has been no clarity or planning for the future. I would urge an early announcement to allow our staff, many of whom have established themselves in London, making a home for their families, to plan ahead for their future. We are now heading for a long period of huge uncertainty. We do not know how this will affect our buyers – both UK and overseas, or our European employees. We need early decision allowing us to plan our business.”

Paula HigginsPaula Higgins, chief executive of the HomeOwners Alliance: “No-one knows the impact of this momentous vote for the housing market so in the short term, the only certainty is uncertainty. This is bad news for financial markets and will probably impact interest rates longer term, so mortgage holders will want to watch this space. House sales fell ahead of the referendum and we can expect people to continue to watch events unfold before making any big financial decisions. We can expect the rate of house price growth to slow nationwide, while in London the limited housing supply could reduce the impact on house prices.”

Alex Newall, managing director at estate agents Hanover Private Office: “Stay calm, there is still a property market. We all need somewhere to live as a family or a business - the world will not stop. We are closing deals, despite a measured Brexit in two years’ time. This is not a time to for a knee-jerk reaction. We can no longer use past data accurately to help predict the future. Over the next two years, until Brexit actually happens, gradually the rule book will be re-written on asset prices in the UK. Yield hunters, e.g. pension funds, will have to be careful to protect their underlying asset value over the next two years and pre-planned exit strategies will need to be considered. A long-term strategy on safe, stable income streams will attract major interest. Sectors such as student housing, assisted living… and supermarkets (ie. basic ‘need’ businesses) will see more interest than luxury/‘want’ markets.”

Charles Curran, principal at Maskells Estate Agents: “The market has been filled with uncertainty over the past couple of years and now that we have voted to leave, this draws a line under a major obstacle in getting the Prime and Prime Central London market back on its feet. There is no doubt that the slowdown in the market prior to the referendum was as a result of the Chancellor’s ill-conceived increase in stamp duty, and as such we do not expect to see an increase in prices. We expect the domestic buyers to remain subdued, perhaps opting for rental accommodation (rents being low for the time being due to oversupply and high cost of acquisition), but we do we expect more interest and volumes from overseas buyers. An unwanted consequence of leaving the EU is that our currency will depreciate, making property cheaper in net terms. Why would they want to buy here?  For the same reasons they always have – London is the greatest city in the world to live in – and we are not biased!”

Simon Deen, director new homes, Aston Chase: “After two months of the most divisive debate in recent political memory, the British public have proved the bookies wrong yet again, and voted to leave the EU. The truth is that no one is really sure what will happen next. Sterling, which hit a 2016 high only yesterday, could well fall, making London property more attractive to foreign investors who for some time have seen the British government try to ‘tax’ them out of London. Are we better off out?  Only time will tell. In the short term, buyers will see the market as being in their favour, and it is arguably the developers and vendors who will now decide where we are heading.”

Paul SmithPaul Smith, chief executive of haart estate agents: “We’ve grasped a huge opportunity for the UK and we have every reason to be confident about the long-term success of the property market. The underlying strength of property is sound, and it will remain a great investment because more people than ever are looking to get on to the ladder and there simply aren’t enough homes available. In the short term, things could be turbulent as people come to terms with a result that wasn’t expected. But we now have some certainty.  It’s up to the government to lay out a clear timetable for renegotiation of our relationship with the EU so that we can get on with doing what British people are very good at – buying and selling houses. Smart buyers stand to gain from the uncertainty of others in the weeks ahead, and confident sellers may find that they are in a good position as others wobble. In addition, the Brexit vote has made the UK property market very attractive to foreign investors as a result of the fall in the value of the pound. Britain should be confident – we are an economic powerhouse and we will continue to be a magnet for international investment.”

Ben Horne of prime property finders Middleton Advisors (Country team): “Despite the sense that leaving the EU and the time it will take to negotiate our departure will generate uncertainty and create a drag on the property market, in reality life goes on and young families will continue to leave London in search of country life, along with factors like inheritance and debt.  Those factors that create ‘churn’ in the market cannot wait for two years (the estimated re-negotiation period) and so it’s likely to return to normal activity levels after a short pause.”

Mark Parkinson, director of Middleton Advisors (London team): “I think we can only stick to ‘knowns’ as we are now in uncharted territory. As far as our world is concerned, British and non-European buyers’ decisions to buy are unlikely to be massively affected by Brexit in the long term. No-one yet knows how this will affect European buyers. In terms of the UK prime housing market, we expect little or no effect on the country market as people tend to take a long term view when buying country houses. The prime London market depends on so many factors it is difficult to make a prediction.  In the short term, one of the main certainties is that trading levels are likely to drop off markedly as buyers ‘wait and see’ what happens.”

Andrew Langton, chairman of London estate agency Aylesford International: “The referendum has divided families similar to the Spanish civil war, exposed a number of duplicitous politicians, caused mayhem amongst bookmakers and desecrated markets. Since the Chancellor’s hike in [stamp duty] coming into effect in April 2016, the London residential market has been very quiet and subsequently the indecision caused by the referendum brought it to a virtual standstill in Q1 and Q2 particularly at the higher end. So where do we go from here? After the Chancellor has introduced an emergency budget in which he increases income tax, corporation tax, inheritance tax and reduces the defence budget but maintains overseas aid, the vote to leave could now see us heading for absolute chaos. We should remember that we continue to have the highest stamp duty rates in Europe to factor into some of our now overpriced properties and within ten months a number of non-doms will be leaving town. This is not a time for the faint hearted.”

James Davis, head of building consultancy at Daniel Watney LLP: “Immigration has been at the heart of the referendum debate, and limiting freedom of movement will undoubtedly be central to any deal with the EU. But the construction industry is reliant on labour from Europe and beyond, and given the skills shortage we already face, any restrictions we face will only cause further damage.”

Jonathan StephensJonathan Stephens, managing director of property consultancy Surrenden Invest: “The atmosphere remains optimistic as we decipher just how this momentous decision will affect UK property both immediately and in the future. In periods of uncertainty, residential property has historically outperformed other asset classes – in addition to the attractive income stream it provides. Even during the Global Financial Crisis for example, UK house prices strongly outperformed the FTSE all-share index. I don’t believe property in Britain’s emerging markets; Manchester, Birmingham, Liverpool, will be heavily affected. These regions will remain resilient and are not set to experience any real impact. It will be London’s property that is most significantly affected by the decision, slowing down the market’s recovery. After the initial shock of the referendum result, I am now excited about the encouraging long-term prospects for the UK’s housing market and its investors.”

Rob Clifford, commercial director of property specialist SDL Group (which inludes residential estate agent Century 21, property auctioneers SDL Bigwood and SDL Graham Penny, and surveyor and valuation network SDL Surveying): “Increased regulation is often very unwelcome and, in my view, some of the red tape the industry has been bound-up in has often disregarded the maturity and complexity of the U.K. However, SDL Group was behind a remain vote as it was a clear route to offer maximum and continued stability for both the housing market and the British consumer. These are uncertain times for all of us, but it’s important to approach the situation we find ourselves in with a level head. Risks will undoubtedly come from such uncertainty, but that is the very nature of the market we’re in. It’s very much business as usual.”

Chief executive of London estate agency Dexters, Jeff Doble: “Following months of will we/won't we, the referendum is now out of the way and already this morning in London we have seen several dozen new sales agreed, there no longer being a compelling reason to ‘wait and see’. After some short-lived hesitation from buyers ‎and investors we expect prices to remain steady and then rise gradually in 2017. We have spoken to literally hundreds of investors, property developers and buyers today and they are overwhelmingly pressing on with their plans. Buyers and, in particular, international investors continue to see London as a safe, long-term investment, with reliable returns from a vibrant letting market. London will no doubt reflect - then realise that property prices aren't going to change much and nor are the prospects for London property over the coming years. At Dexters, it is business as usual: ‎life and the market will carry on.”

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