The UK stands on a precipice. While Theresa May, David Davis, Tim Barrow and their team play a staggeringly expensive game of Deal Or No Deal with EU negotiators, the British public (quite reasonably) demand answers.
They want to know what will happen to their small businesses, their vehicles and how it will affect the food they put on their plate.
Economics experts are doing their best but after much hand wringing, the consensus seems to be that nobody really knows and that the best thing to do is adopt the Blitz spirit of keeping calm and carrying on.
Opinions vary from worryingly optimistic (John Redwood’s recent article on the subject of a ‘no-deal’ scenario is cheerful in tone but distressingly myopic and in a few cases factually inaccurate) to prognostications of doom.
The subject of how Brexit will affect property owners and the prices of commercial and residential property prices has been the subject of speculation here and elsewhere.
All manner of minds from economists to mortgage brokers have put a lot of work into trying to ascertain how leaving the EU and the single market as well as the as yet unsure effects on net migration will affect property prices in the UK.
While nothing is certain (when has anything ever been certain in the property market), we are able to make some educated guesses…
It’s all relative
One can’t go into the value of property without first looking into the state of the economy itself. Indeed property prices are often considered a litmus test for how well an economy is functioning.
The triggering of Article 50 was immediately followed by a nosedive for the pound which was cause for alarm for many but this has stabilised somewhat while markets wait out the uncertainty of negotiations.
There are other economic motivators that will also affect the value of property rather than the intrinsic value itself. The removal of freedom of movement will have a colossal impact on net migration which will likely lead to a labour crisis which could seriously impact on demand and consumer confidence.
A matter of confidence
Consumer confidence is possibly the biggest economic motivator in any market. Signs of a decline in job creation and the inexorable rise of private rental properties (coupled with an increasingly serious stalling of the creation of new properties) has seen a worrying decrease in consumer confidence.
Not only are private tenants spending more of their income on private rent, rendering them unable to save for a deposit on their own property, they are becoming less able to progress to new better paid jobs.
The story so far
Since Article 50 was triggered there has been a stagnation in property price growth that has been almost entirely exclusive to London, but this has seeped into the wider market as of last quarter which showed the first downturn in house prices since November 2012.
While there are many factors influencing the property market at present, both related and unrelated to Brexit, the market appears relatively stable with the worst pinch felt by those who earn highly expensive properties in London boroughs such as Chelsea and Kensington.
So long as mass unemployment can be curbed and inflation can be kept under control the property and mortgage markets will hopefully be able to weather the Brexit storm.