Amid the upheaval, one thing we do know is that we all have a part to play in ensuring UK homebuyers and owners remain confident about their futures and the housing market.
For those of us in the UK residential property market, many things that have underpinned values in recent months have not changed. We do not have enough of the right type of housing for everyone who is currently here and in need of it. Housing remains the single most important asset that homeowners are now expecting to provide; not just a roof over their heads, but perhaps fund a pension, long-term care or grandchildren’s school fees.
This lack of supply has been the foundation of house values for as long as I can remember and no economic turmoil in living memory has done anything other than temporarily derail (or more accurately, curtail) values.
This isn’t complacency but an observation that the economic facts always end up outweighing any swings in sentiment. It’s incumbent upon us all to remember sentiment is a feature of value not a definition of it. Hard comparable evidence underpins sound defensible judgments.
Even if some parts of the market do feel a pinch, events such as a probable move in interest rates will create opportunity and demand for the housing value chain. The Brexit vote means we are likely to see an extension of looser-for-longer policy from all of the world’s most prominent central banks. UK interest rates could well be cut to zero, and the US, European and Japanese Central Banks are all likely to become more nervous about increasing rates. This should all be broadly supportive of all assets including residential housing in the months ahead. If there are concerns about individuals’ ability to sustain those values, these are not yet a matter of fact and may not become so. The journey ahead may be a bumpy one but it may not be a universally difficult one.
There is plenty of uncertainty ahead. But uncertainty can mean opportunity as well as risk, provided there are cool heads to assess developments but encouragingly even though uncertainty levels have risen, markets have functioned properly. They fell and then stabilised, in contrast to the wild price movements we have often seen on similar days in the past.
The medium-term outlook will be determined by central bank responses, global risk appetite, political risk, and economic contagion. We can talk ourselves into a recession of course. But what we really need to fill the vacuum left by our absence of political leadership is for those of us in the mortgage market to take up the reigns of leadership, no matter how big or small, and show that where politics falters, we can succeed. It’s our response in times like these that actually marks us out as business leaders.