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London Property Market 25 August 2016

Economic indicators and market confidence defy Brexit vote fears

Numerous indicators measuring economic confidence in the weeks following the EU referendum vote for Brexit point to ongoing confidence, meaning now may be a good time for homeowners who are considering selling to bring their property to market.

Many experts predicted a significant economic slowdown if the UK voted to leave the European Union on 23rd June, but so far those worst-case scenarios have not become reality. With UK employment at its highest level ever, the Bank of England cutting the base rate to underpin jobs, lending and investment, excellent mortgage availability and consumer confidence holding steady, there is little sign of a housing market slump. Economic forecasters are also now predicting that the UK is unlikely to slip into a recession on the back of the Brexit vote, as some had previously warned.

Guy Gittins, Executive Director at Chestertons, says: "The market principles of supply and demand hold true, and in London demand for homes to buy or rent remains very strong despite mid-term uncertainty as to what the UK's negotiations to leave the European Union may bring. In the meantime, the Governor of the Bank of England has moved decisively to keep the mortgage tap open and to prevent landlords fleeing the market, and we hope that the new Chancellor will also follow suit.

"For committed sellers, now may be an ideal time to enter the market, especially as we move through the summer towards a traditionally very active period of the year. Buyers likewise can be confident that any investment made now, whether backed by a very affordable mortgage or a cash purchase, will represent a solid investment over the medium to long term," Gittins adds.

"While the Brexit vote was a shock to many and seemed to go against some experts' warnings of doom and disaster, so far at least there is cause for cautious optimism. Many economic indicators seem to show that the worst-case scenarios may not come to pass, and consumer confidence seems remarkably resilient. Many of our branches in London are reporting an upturn in new buyer registrations and viewing activity, and it is also worth noting that, unlike during a major recession such as the last financial crisis, there is little sign at the moment that mass redundancies are likely – one of the main drivers for house prices to fall quickly, as homeowners can't afford mortgage payments and are forced to sell," Gittins continues.

"At the same time with interest rates at historic lows and looking more likely to fall again before they rise, buyers and existing mortgage-holders shouldn't fear sudden spikes in repayments that again may force some to sell up. The latest figures show relatively few mortgaged homeowners in arrears, so overall there seems little sign that forced sales will be a factor in the foreseeable future. While prices may not be rising as quickly as they have at times in the past two years, its seems unlikely they will fall significantly across the board and force buyers into negative equity," Gittins concludes.