October 20th 2016
We give our view on the rural uncertainty prompted by Brexit
Anecdotal evidence from housebuilders suggests that the concerns over Brexit have not materialised in respect of footfall and reservations on sites known to Sworders. Across the Midlands and South East, deals agreed prior to the Referendum are largely being honoured, and, where there have been cancellations, very few are quoting Brexit as the reason. Indeed, since 24th June, a number of new deals have been struck at the levels anticipated beforehand. This can be attributed to a number of factors:
- Interest rates are at an all-time low and although the ‘Help to Buy’ scheme for new builds is coming to an end, 5% deposit mortgages are likely to remain in place and the Help to Buy ISAs are unaffected. This makes for a solid base for the market to maintain its momentum.
- Before the EU referendum, major housebuilders were well capitalised and transaction levels were strong.
- A weaker sterling usually signals an increase in UK exports, and overseas land investors, for whom UK property looks quite attractive at current exchange rates, are already playing a role.
- The under-delivery of housing in the UK remains a problem, illustrated by the government’s ambitious ongoing housing targets.
It must be said, though, that it is likely that housebuilders will take a cautious approach for some time yet when investing in new land. Founded or unfounded, uncertainty around the potential impact of the EU referendum result on the UK economy is likely to persist for some time. While much remains uncertain, it must be remembered that a tangible, durable asset such as land often thrives in times of adversity and is seen as a safe haven investment in a stormy market such as this.