It’s like watching a bad soap opera (are there any good ones?) or episode of Jerry Springer: One group of fairly thick people holds one point of view. Another group holds the polar opposite.
One or two people appear to be voices of reason but they are drowned out by the shouting of either side. Both groups are absolutely convinced that their opinion is right and that no-one else’s view is worth the paper it’s written on.
To reinforce their entrenched positions both sides cling to the most extreme arguments and potential outcomes. Cue a lot of shouting and not much listening. Unfortunately, this sums up how the “debate” over EU referendum is being conducted - A gigantic talk show with egos getting in the way of common sense.
But let’s look at what will happen if we do vote to leave. The “Remain” campaign is painting the worst possible picture:
And indeed this may happen (well maybe not number 6 unless they are looking for a good lunch). But only if we decide to shoot ourselves in the foot. Indeed, as Ed Conway of Sky News points out, this is a scenario that is so unlikely that it is absurd that the government and Treasury department are focussing on it.
What is much more revealing is the figures that they are omitting, which show that the most likely scenario is the “Norwegian” agreement. This suggests that there will be no recession and that the world will keep spinning! Who would have thought that such a thing would be possible?
Understandably many buyers and sellers are waiting to see what the referendum will bring. Interestingly virtually everyone I speak to thinks the “Remain” vote will win; even those people who have said that they will vote to leave don’t think they will win.
This is mainly because of point 5 – Jobs will be lost. Although this is unlikely as Ed Conway points out, it will be enough of a fear to persuade many voters to avoid upheaval and an “uncertain” future. But the important point is that whichever way the vote goes, London is not going to turn into a ghost town.
What I can promise, though, is that even if the UK votes to remain, there will still be plenty of reports in the press about an imminent property crash in prime central London. This is good news for buyers because:
This is essential to understand. The big property market crashes of 1990 and 2008 happened when the consensus was that prices could only go up, i.e. everyone who could buy property was in the market. Hence the mad frenzy with prices increasing 25-35% per annum in 2006 and 2007.
Compare that with the last 6 years in London where prices have increased at 10% per annum compounded and the fact that this has happened with very careful lending (according to Lloyds Bank 54% of properties bought for over £1m between 2011-2014 were bought with cash and a further 25% were bought with mortgages of less than 50% LTV).
You can see the huge difference. London is on a very solid foundation (with the exception of the high density new build developments).
In years to come people will look back on 2016 as a great year to have bought property just as we look back at 1998 as a good year to have bought property despite the fact that at the time things seemed appalling: we had the collapse of the Asian “Tiger” economies, Russia defaulted on its bonds and Long Term Credit Management collapsed putting the financial system in severe danger.
So when the referendum is over beware being influenced by continued negative reporting. My view is the next “major crisis” they will focus on is the US election and the dangers of Trump winning.
Just remember most of what you read is “noise”. You have to be very clear on the facts so you must not rely on the statistics in the press. They are simply too general and are consequently misleading. Just because falling prices are being reported does not mean that they are in your/your clients target area and price range.
It is essential to have complete understanding of what is happening in your particular target market.
The second edition of my book, The Insider’s Guide To Acquiring Luxury Property in London has just been published. It reveals many of the strategies and techniques I have honed over the last 15 years to acquire some of the finest homes in London for my clients.
It is essential reading for anyone planning to acquire a home or investment in London. If you would like a complimentary copy or if you think that your clients would benefit from receiving it - you may want to highlight the chapter on preparation and the importance of speaking to financiers, solicitors and tax advisers before even looking at a property – please email me using the link below.
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