It was a stunning event, given that the decision to leave was never fully appreciated as a distinct responsibility.
Prior to the referendum, HMRC postulated that house prices could fall by as much as 20 per cent in the two years following a vote in favour of Brexit.
Prior to the EU referendum, HMRC postulated that house prices could fall by as much as 20 per cent
Such doom and gloom predictions reached a heightened frenzy in the months following the announcement of the referendum result.
Société Générale made the bold assertion that property prices in the capital could fall by more than 30 per cent as a result of Brexit.
Of course, it is easy to look back on these projections with the benefit of hindsight.
The point here is that, despite all the negative projections regarding Brexit on the property market, none of these came close to fruition.
Even amidst a period of vacant political leadership concerning Brexit, UK property remained an attractive destination for foreign and domestic capital alike.
As a result, house prices have continued to rise, albeit at a modest rate.
In the 12 months leading to November 2019, the Nationwide Building Society recorded house prices rising by an average of 0.8 per cent.
If 2019 was the year of political uncertainty, 2020 has so far proven to be a year of new beginnings.
Boris Johnson’s resounding victory in the December general election triggered what some commentators have termed the ‘Boris bounce’.
Interest in UK-based assets is rising, resulting in increased transactions and renewed investor confidence.
This is particularly the case when it comes to foreign investors – in the aftermath of the general election, a Chinese property tycoon was reported to have purchased a 45-room mansion in Knightsbridge for over £200m.
It is difficult to tell how long the Boris bounce will last for.
Some question its longevity, although it could be claimed that Sajid Javid’s decision to resign as chancellor signifies the beginning of this initial economic honeymoon period.
Only time will tell; nonetheless, investors are clearly benefiting from a renewed sense of confidence in the UK economy.
Looking to the Spring Budget
The 2020 Spring Budget is happening on 11 March, and until recently, it looked set to be an opportune moment for the government to outline its fiscal plans for the coming five years.
That was until Sajid Javid’s resignation – and there are now questions over whether the new chancellor, Rishi Sunak, shares the same vision and commitments as his predecessor.
Nonetheless, based on what was pledged by the Conservative party in the lead-up to last year’s general election, there are still reforms we can expect being addressed.
The Conservative party’s plans to implement a 3 per cent stamp duty surcharge on non-UK buyers may help this cause.
With a chronic imbalance between the supply and demand of UK housing stock, this will be a prudent policy – FJP Investment recently surveyed over 750 UK property investors, and 70 per cent were in favour of the measure.
With such widespread support, the government could go further still and also reduce the tax on first time buyers who have yet to gain a foothold on the property ladder.
After all, the Conservatives have announced that they will attempt to build 1m new homes by the end of this parliament.
They are right to be ambitious; to fundamentally tackle the housing crisis this kind mega-scale housebuilding effort will always be the main challenge.
To achieve this kind of aim, the government will need to encourage the construction industry, and its announcement of £100bn for construction over the course of this parliament is certainly a step in the right direction.
It is clear that the Boris Bounce has helped reignite positivity in the property sector, with the prospect of Brexit being completed on time engendering additional confidence.
The UK is now amidst an 11-month negotiation period with the EU. Having formally left the union, it has until the 31 December 2020 to strike a new trade agreement.
This will be no easy feat, however, there are reasons why Brexit should not be framed as a negative event.
Investor demand for property is rising, and this explains why Savills anticipates house prices to rise by 15 per cent over the next five year.
I now look forward to the Spring Budget on March 11, where I hope the chancellor will deliver on his party’s promises, thereby helping everyone — up and down the property ladder — enjoy the fruits of the market’s return to form.
Jamie Johnson is chief executive of FJP Investments