Crying is all right in its way while it lasts. But you have to stop sooner or later, and then you still have to decide what to do”… or so said CS Lewis when he wasn’t encouraging us to venture through a mythical wardrobe to play with an allegorical lion.
In Scotland, over the past couple of years we have had our fair share of deciding to do.
First there was IndyRef, then LBTT, tenancy reviews and now Brexit – our own chance to venture through a mysterious portal into an unknown land.
So what does this mean for the property market?
First the good news. The day after the referendum, Rettie & Co took a week’s worth of sales in one day, including a few high value sales, suggesting that far from the market collapsing, life was going on. In fact, compared to the same week in 2015, sales were up almost 50 per cent.
But this spike should not be seen as unexpected, indeed, much the same thing happened with the Scottish referendum.
So what’s the explanation? For most buyers and sellers, it is the fundamentals of employment, life stage, affordability and housing need that drive decisions, whereas macro political changes do not have the same immediacy – despite their importance.
Basically, if you think you’re still going to have a job, still need somewhere to live and can access mortgage lending then needs must.
It is for these reasons that the 2008 crash and the introduction of LBTT had a far more pronounced immediate impact on the market as restrictions in credit and the cost of transacting constrained the actions of buyers and sellers.
With Brexit, a lot of change is likely to be slow – interest rates are forecast to remain low and lending availability constant.
This means we would expect house prices to remain stable as demand persists and new supply is historically weak.
This said, with uncertainty comes hesitation and we may see the number of transactions cool as people feel less urgency to move or climb the ladder.
So while the basic need to buy and sell will keep the market predictable for the majority of buyers, there have been some interesting upshots from the Brexit vote.
The day after the result, Rettie offices across the country noticed an increase in inquiries from south of the border, especially London.
The number of buyers relocating from London to Edinburgh has seen a steady increase, up 10 per cent last year alone.
As financial and political centres the two cities have much in common, but property prices are what gets would-be movers really excited.
You can buy a 2,555sq ft Georgian townhouse with four bedrooms and garden in Stockbridge at £420 per sq ft – a price that would buy you a two bed apartment in Fulham.
Another interesting by product of Brexit and the decline in the value of the pound was the increase in foreign inquiries and purchases as double digit discounts on the cost of UK property proved appealing to those earning in dollars who were able to act quickly.
So the sentiment seems more concerned with day-to-day practicalities of life than the uncontrollable machinations of global politics.
There can be no doubt that impacts to the cost of borrowing, employment, skilled migration for the house building sector, internal UK politics and EU deals will all influence the housing market but much like CS Lewis’ Chronicles of Narnia, it is likely to be an epic rather than a novella.
Andrew Meehan works in
the research department at
Rettie & Co