WILL THE TRIGGERING OF ARTICLE 50 MAKE A DIFFERENCE?
Finally the deed is done! The long awaited formal notification that the UK wishes to leave the EU has been delivered. No doubt many will be wondering what impact this might have on the residential property market.
With regard to our status within the EU, very little will change immediately as the EU needs a consensus from the remaining 27 Member States before negotiations can begin. This may not happen until late May or even early June to avoid clashing with the French elections.
However, one point that is very clear within Article 50 is that two years after its activation, the U.K. will no longer be a member of the EU, whether or not a deal has been struck on the terms of the divorce – unless there is mutual agreement to extend the negotiation period.
With specific regard to residential property, the immediate impact will be negligible save for perhaps some negative media comment. The market has known for some time that Article 50 would be triggered by the end of March and any response is therefore likely to have occurred already. Attitudes may of course change once details of the negotiations emerge, however that is some way off and neither prices nor activity are likely to see any change until then as a direct result of the triggering of Article 50.
In the meantime, sterling may suffer a further slight decline against both the dollar and the euro, although the market is likely to have already priced in Article 50. There may be a bout of nervousness from some investors as the reality of the formal commencement of the separation hits home, but our experience is that most have already taken stock of the situation and decided to act - or not - as the case may be.
The jury is out as to whether financial services companies will move staff abroad in large numbers. In any event, the tech sector is rapidly increasing its presence in London and already employs more people in the capital than financial services.
Arguably of more immediate concern is the likelihood that interest rates will rise sooner than anticipated against a backdrop of rising inflation and the second hike in US rates in three months. This may possibly prompt a flurry of activity among buyers to advance their purchase plans and owners to re-mortgage.