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

The post Why Brexit won’t really make any difference to the mainstream property market first appeared on Property Insider.

First of all let’s look at a few fundamentals:

What could happen to interest rates?

It’s as well to remember that interest rate rises have been on the cards for a couple of years now. Most analysts are suggesting that, in a period of uncertainty after the referendum, the Bank of England is likely to be cautious about raising the interest rate. But the inflation figures of late could see some small upward movement soon.

What could happen to the value of the pound?

Bearing in mind its pre-referendum, buoyant level chances are that it will depreciate further. In the process it could, perversely, make UK property even more attractive to foreign buyers than it already is.

In a report last year Dutch bank ING suggested that if the UK voted to leave the EU then the value of the pound could fall to one euro=90 pence, the level the pound was at in 2011. Today it already stands at one euro=87 pence. Bear in mind the value of the euro is weak anyway.

Would foreign buyers be shut out of the market?

The UK market, particularly in London, has been fired up by foreign buyers over the last few years, although activity has slowed down of late as a result of tax changes as much as anything else. So would they be unable to buy, impacting the market as a result? Probably not, since the entitlement of foreign buyers to buy property in the UK is enshrined in UK law, not EU law. They might not find it such an attractive investment (even with a weaker pound) though.

Companies and funds could very probably reduce their involvement in the property market however. A pre-referendum report by Consultancy firm EU reports that 31% of investors they have surveyed say they are likely to reduce or freeze their investments in the UK up to 2017.

How could it effect the rental property/buy to let sector?

The rental property sector has become a very significant part of the UK property market over the last decade. Since a significant portion of demand in this market comes from migrants (one in ten of the UK workforce are now from abroad) who probably wouldn’t be able to come so easily anymore, demand for rented accommodation could possibly decline.

It’s worth remembering that most areas have a huge surplus of demand for accommodation over supply, however, so the impact could be negligible.

What will happen to prices?

Most experts are still predicting that after a blip in the election period in 2015 house prices will still continue to rise steadily by around 3-5% a year each year for the next five years and will be around 20% higher by the end of the decade. That’s a fairly modest forecast for annual price appreciation though, so unless UK economic growth and employment levels are severely affected by Brexit (which in all honesty it’s really too early to call) it’s not unlikely that prices could still continue to show modest rises.

It is worth bearing in mind that any impact on property prices is more likely to be felt in the London/south east property market, and much less elsewhere …. and that seems to be happening already.

Lastly, remember that property markets are super-sensitive to market sentiment. The UK property market is as much likely to be affected by uncertainty in the period before and after actual Brexit as much as anything else.

Property Insider Editorial by Mark Hempshell, Editor in Chief 

The post What Brexit Could Mean For The UK Property Market first appeared on Property Insider.