Much has been said about Brexit, and how it might affect the property market. But permit me if I may to offer a few thoughts on why leaving the EU won’t make much of a difference to the UK property market. And why investors, landlords and developers shouldn’t have that much to worry about.
Go back to before the UK joined the EU, or Common Market as it was then.
The property market soared in the 1960s. The main driver back then wasn’t EU trade. It was world trade.
And money, and aspiration. People had jobs and they had money to spend on buying a home.
The growth of the mortgage finance market was a major factor too. Growing numbers of middle class people found they could apply for, and be given, a mortgage for the first time. Although it certainly wasn’t easy. And it definitely wasn’t cheap. It was at least possible.
All this led to an upsurge in demand for homes which had never, ever been seen before.
Builders and developers started to respond to this growth in demand. Building thousands and thousands of homes right across the country. As anyone around in those days will tell you, green fields were turned into vast housing estates, built and occupied ….. often in just a few months.
So what will really will change all that much after Brexit?
Let’s be frank, the EU has never really had any direct impact on the property market. Most if not all of the drivers are dependent on UK, not EU, policy.
After Brexit people will still have jobs. There might even be more jobs, as businesses rake advantage of world trade once again. And people will still have money to spend. On renting as well as buying.
People will still be able to raise finance to buy property. It will be just as easy and cheap as it is today, more or less. And still far, far easier and cheaper than it was back in the 1960s.
So even after Brexit there’ll still be huge demand for property. (Also bearing in mind that, chances are, most EU migrants will be able to stay and, one way or another, still be able to come and work here.)
But there will be one thing that will be significant after Brexit ….
There will continue to be significant undersupply of property to buy and to rent. For example, according to RICS the UK faces a shortage of 1.8m rental homes alone.
Brexit would need to cause some dampening of demand to have any effect on those figures. And it almost certainly won’t.
Builders aren’t building housing estates on the scale they did in the 1960s, 70 or 80s. Who knows, Brexit uncertainty might even cause them to build fewer. Not many people have a great deal of confidence in the Government’s likely White Paper pledges to build more homes, or permit more extensive development in the Green Belt.
And unlike in the pre-Common Market 60s there’s very little new council housing being built, and little prospect of their being very much more. In most places where social housing is being built demand still vastly outstrips supply, and is likely to continue to do so.
So, it’s with some confidence that I believe Brexit really won’t make any difference to the property market over the next few years, meaning prospects for investors and landlords will still remain favourable. Even when you take everything else into account the simple fundamentals of demand for outweighing supply should see to that.
Mark Hempshell is Editor In Chief of Property Insider