UK EU Referendum – Result – June 2016

• Sterling – the value of sterling will inevitably fall in the near-term, along with the stock market
• Exporters and financial services firms – will be in the forefront of the downturn
• Bank of England – expect to respond quickly – an interest rate cut of 25 basis points is a strong scenario at the Monetary Policy Committee’s meeting in July
• Quantitative Easing – potentially used if there are signs that investment is deteriorating
• Employment – any job losses are likely to take time to filter through to the statistics
• Inflation – driven by the pound’s devaluation so likely to come through later
• Assets – mini economic cycle made up of extended investors and falling sentiment leading to likely weigh on asset prices
• Opportunity – Lower prices and exchange rate should attract overseas investors
• UK economy – underlying strengths remain in place, and ultimately real estate is an investment that works best for those looking for long-term investment

Slow price growth, however the EU referendum has been only one of many determining factors, including:

• The UK General election and the possibility of a Mansion Tax
• Higher rates of stamp duty (November 2014)
• The additional rate of stamp duty for investors and second home buyers (March 2016)
• Fair to speculate that at least some proportion of the decline since April is related to market uncertainty caused by the referendum
• Brexit will generate a certain period of renewed uncertainty, perhaps over the course of the summer, in the prime London residential market
• A portion of demand from investors, will be delayed and may be redirected to other markets

Demand for prime London property rests on a wide range of drivers – most of which are unaffected by the referendum decision:

• The scale of London’s business hub, level of skills, our education, lifestyle and language
• Yesterday sterling was 14% below its mid-2014 peak so pricing in the prime market was more attractive for US dollar buyers
• Further weakening of sterling may well increase inward investment
• Interest rates could in fact be lower for longer, despite the risk of imported inflation from weaker sterling
• Although long-term benefit of low interest rates on the housing market may be questionable, in the short-term they will assist demand especially for equity rich buyers with access to the best funding rates

For more information, advice or just a chat contact Nicholas Jaffray on

nicholas@jaffray-estates.co.uk or telephone 020 3091 9311 Full details of Jaffray Estates’s property search services can be found via:www.jaffray-estates.co.uk