Brexit Briefing: The Impact

on the Mainstream Market

The Impact On The Mainstream Market
The Impact on the Mainstream Market

12 July 2016, by Lucian Cook

Caution is likely to affect sales in the housing market but low interest rates will underpin prices

Summary

Buyer sentiment: initially caution, particularly among discretionary buyers, is likely to curtail housing market activity as buyers’ willingness to commit to a major purchase weakens. Over the medium term we expect to see sentiment improve but also fluctuate as negotiations to leave the EU proceed.

 

Transactions: buyer sentiment is likely to lead to lower sales volumes in the short term. The possibility of tighter lending could pull transactions numbers further down from recent UK highs of 1.3 million a year. However, at this stage, we do not expect sales volumes to decline to post credit crunch lows.

Mortgage lending: so far it has been business as usual. Should downside risks persist, there is a possibility that lenders tighten lending criteria. If stricter borrowing rules come into play, first-time buyers and second steppers will be the most affected.

Low interest rates: will underpin house prices with the prospect of a cut in base rates. This may present opportunities for those on low loan to value mortgages.

House prices: price growth is likely to slacken as a result of weaker demand in the short to medium term. Looking ahead, the possibility of a slower economy could have an impact on price growth. We do not rule out the possibility of price falls in weaker markets.

Low supply: low levels of house building has resulted in a market that is fundamentally undersupplied. This has not changed.

Articles from 'Brexit Briefing: The Impact on the Mainstream Market'

The Impact on the Mainstream Market

Market driven by short term sentiment and longer term economic fundamentals

 
 

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Lucian Cook

Lucian Cook

Director
Residential Research

Savills Margaret Street

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Savills Margaret Street

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