Without wishing to add to the hyperbole over Brexit (from both sides), it’s fair to say that Britain is all over the place today. From the temporary suspension of trading in Royal Bank of Scotland and Barclays shares and sterling’s continued slide against the dollar, to the slump in the return on government bonds and a profit warning from easyJet, the UK is beginning to digest its decision to leave the European Union.
In the morass of doom and gloom was another profit warning, this time from Foxtons. The estate agent said concerns following the vote will depress London property sales and, in the first few minutes of trading, shares in the company dropped 18 per cent. By 11.45am they had plummeted by 22 per cent.
At the time of writing, the big property developers were down sharply again on the FTSE 100. Taylor Wimpey shares fell 16 per cent by 11.30am while Barratt Developments and Travis Perkins both fell 13 per cent.
Tempted to crawl back under the duvet until, oh, Christmas? Before you do, consider this small sliver of hope from the Council of Mortgage Lenders (CML), which represents lenders in the UK. In this month’s market commentary, published this morning, the organisation said that it expects a ‘wait and see’ approach from potential buyers and sellers of property following the referendum vote – but no house price falls.
CML senior economist Mohammad Jamei said: ‘As expected, lending continued to be somewhat dampened in May, reflecting the earlier rush in the first quarter to beat the stamp duty change on second properties.
‘Looking ahead, there is likely to be considerable uncertainty as a result of the EU referendum decision. We expect this to affect sentiment and reduce activity below levels that would otherwise be expected in the near term, as both buyers and sellers adopt a wait-and-see attitude until the dust begins to settle. Market fundamentals underpinning house prices still look sound, and we do not expect significant house price falls, especially given the current supply demand imbalance.’
However, it’s worth reflecting on CML comments from last week, made shortly after the EU referendum vote was declared. The industry body said: ‘The more quickly markets resettle, the lower the impact on the housing market is likely to be. However, any prolonged disturbance would inevitably impact the housing market.
‘Mortgage pricing is unlikely to react instantly, although pricing may be affected in the foreseeable future because of the effect on lenders’ cost of funds arising from the perception of economic uncertainty. How long this lasts will depend on how quickly markets resettle.’
Then there’s the Brexit reaction from a slew of other housing experts. Richard Donnell, insight director at property analysts Hometrack, said the immediate impact of the vote ‘is likely to be a fall in housing turnover and a rapid deceleration in house price growth as buyers adopt a wait and see approach to the short term impact on financial markets and the economy at large’.
Meanwhile, Jan Crosby, head of housing at KPMG UK, predicted transaction volumes would decrease and ‘stay deflated for some time – perhaps until next spring. While we may not notice much of a change over summer, given the traditional hiatus in the housing market, the usual pick up in autumn may not materialise.’
What should we conclude from all this comment and analysis? Let’s borrow the words of American screenwriter William Goldman: ‘Nobody knows anything.’
Helen Nugent is Online Money Editor of The Spectator