Simon Deen of Aston Chase looks at the new build property market in the wake of the result of the Brexit referendum.
“In the immediate aftermath of Brexit I was of the opinion that it would be the developers and vendors who decided where the market headed next. As it turned out, this was partly correct, but what I probably underestimated was the demand from foreign buyers, fuelled by the devaluation of Sterling. So in many ways it’s currently a story of two markets.
Any foreign buyer who has had one eye on the London market over the past 12-18 months is now using a combination of the currency play and the fact that developers are more open to discounts than they were pre-Brexit to their advantage, and in some instances seeing prices of 20%-30% below what was previously being achieved.
New build and domestic buyers
However domestic buyers, who aren’t able to take advantage of the currency situation in the same way, and are also not as focussed on ‘lock up and leave’ amenities that a new build development offers, are using the traditionally quiet summer period to take stock of the situation. With mortgage rates continuing to be at an all-time low, and a stable political situation now in place with a new PM and cabinet, things are looking far less uncertain than they did in the week which followed the announcement that Britain had voted to leave the EU. I see the domestic market returning in September, in an arena still characterised by a lack of good quality second hand stock.
All that said, we did lose some deals in what I would now consider as a knee jerk reaction to the news, but have been pleasantly surprised with how these deals have been replaced. For example at The Villas W9, we had four deals under offer pre-Brexit. Post Brexit, we lost two, but two have exchanged and two new deals have been agreed.
As far as off plan properties being sold at below what people paid for them, I haven’t personally experienced this, and it would seem a little hasty when borrowing rates are so low, and rental demand for buyers priced out of London remains steady. Ultimately if you have confidence in the product you’re buying, and aren’t simply trying to make a quick turn, then London property is just about as stable and vanilla and investments come.
Lastly this all feels very different to 2008, no banks have needed bailing out, at least not yet! Sentiment has been shaken, but the foundations of the market in which we operate are strong”