There is an EU referendum on the way. Not breaking news in itself, we are all well aware of the vote. But, with the results very much an unknown, the uncertainty is affecting the property market.
It has been common knowledge that the current uncharted waters are causing recruiters to be nervous. The number of short-term contract team members has increased and at the same time, full-time employment growth is slowing. With so much to play for, companies are erring on the side of caution.
The same is true of the property market right now. Big decisions, whether or not to purchase land, to start work on plans, the next big marketing push etc. have been delayed until after June 23rd. Even after that date, if the vote swings for Britain to leave the EU, many more discussions will need to take place and investments could be pushed back even further.
The macroeconomic environment could be on the verge or a large change, so most property developers are sitting back and waiting for the date to pass to stay on the safe side.
David Sleath, CEO of Segro recently said:
“There is a dramatic slowdown in the investment space because people who have got [property] to sell are sitting on their hands.” Source.
Property is not only a place to live and work but a key investment asset too. On the run up to the referendum, shares in property investment businesses and commercial property companies have been falling. This is again, due in part to the uncertainty, especially where overseas funding is involved. These are nervous time for all investors.
However, Brexit is not the only reason. The UK residential property price boom looks to be over; there are changes to Stamp Duty and the whole global economy is slowing. These factors combined with the EU vote has created a perfect property storm consisting of risk gambles and the jitters.
Thankfully, with a bit of look, the fears could only be around for the short-term. From large property projects to first-time house buyers, there is an air of nervousness. But once the referendum has passed, things are expected to return to normal.
The imbalance between demand and supply shall continue, with house prices, for example, set to rise by 25% over the next 5 years and half of existing UK housebuilders “not worried” about the potential impact of an EU exit. So, roll on June 23rd!