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Property markets have recovered from Brexit vote, says CAAV

November 30, 2016 by  
Filed under Property

Rural property markets are continuing to function as normal, despite the shock of the Brexit vote, says the Central Association of Agricultural Valuers.

CAAV secretary Jeremy Moody says: “Each passing week is bringing perspective, with the underlying strength of the UK economy key to the fundamentals that drive value, while banking reforms and the low interest rates have ensured that markets and lenders are liquid.”

Although the referendum result caused uncertainty in the market, a sense of equilibrium has been swiftly established following the fall in sterling. Mr Moody says: “The impression is that it is business as usual and the UK remains attractive, albeit with much to do.”

Property law

European treaties do not directly touch on property law, so the legal nature of the UK property market will not change after Brexit, explains Mr Moody. The impact on markets is therefore likely to turn on supply and demand, business attitudes to investment, and bank lending.

In the case of agricultural property, markets had been easing since 2015, reflecting weaker returns from farming, says Mr Moody.

“Fundamentally, supply remains tight, and the weaker sterling has actually boosted interest from international buyers.”

The only question, from a practical perspective, affects rent reviews and whether new tenancy agreements should contain a Brexit-based break clause, should the outcome be adverse for that business, Mr Moody adds.

Housing market

Commercial property markets were already slowing while the housing markets had been more affected by tax policy – including the attack on the buy-to-let sector, company-owned and higher value housing in London

“There is also geographic variation, with greater losses seen in London than elsewhere, while areas that voted to Leave have seen more confidence,” says Mr Moody.  “Overall, the country’s shortage of houses is the key fact.”

The Council of Mortgage Lenders reports that the number of mortgages taken out by first time buyers in the second quarter of 2016 was the highest figure since 2007, now slightly higher than the number of loans to existing homeowners.

As with any shock decision, the immediate reaction was more volatile than the medium-term impact, explains Mr Moody. It was important now that valuers retained a calm professional eye. As time has passed, it is clear that both markets and valuers have remained level-headed.”

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