We do not have a crystal ball.
We have thought hard at Butler Sherborn what the result of the Referendum means to us all, and to the property market. There is plenty of speculation and we cannot be sure except to suggest there is no need for an overreaction. For example, it was only earlier this year that the FTSE 100 dropped below 6,000. Having said that we must all embrace the outcome and encourage politicians to work with business and to be decisive about the best way forward for Britain.
We would be naïve to think that confidence would not be adversely affected. Indeed, a number of prospective sellers have decided to put their moves on hold, but only in the short term. Equally there are those who have just asked us to make marketing preparations and on Friday we agreed 9 sales.
We could easily be wrong but we are planning for an early and quiet summer as people now go on holiday but, for a busy and active autumn. We do not think property prices are going to fall and if they do, not by much low interest rates, the availability of mortgages and a shortage of supply should prevent anything but a small drop. We think the market has already been discounted by the uncertainties, and of course people still have to find somewhere to live. Added to that there is a fair bit of pent up demand and in tricky times property is an attractive asset and, of course a home. Once we come out of the turbulence, we predict stability and this will create a much easier market for both the buyer and seller to read and respond to.
In the short term we would not have chosen this option. However, there will be opportunities and we take confidence from the underlying strength of the British economy and the business-like approach taken by the Governor of the Bank of England. Equally, a new look Conservative Government in the autumn will be keen to create a more helpful climate. We think activity in the property market will improve but that we shall all have to work harder to make things happen. This has already been our experience this year. Once we have found the right buyer, or tenant, the agreed transaction has gone through.
Rural land prices had already started to fall back from their 2014 high. There are still many good reasons to buy land & farms whether they be economic, tax, amenity or personal enjoyment. Indeed land becomes a safer and interesting place to invest in 2008 with other markets underperforming. Commodity prices are low for the second year running and that factor is, in many ways a more significant short term factor for farming purchasers in particular. The eventual reform of the farm subsidy system, which has a profound impact on farm profitability may have a greater impact on price if the end package provides less financial support than it does already. Luckily in the Cotswolds and Oxfordshire there is demand from non-farming buyers as well as existing farmers and a shortage of supply will help maintain demand.
In these uncertain times if Butler Sherborn can help, if only by talking through a particular issue, please do not hesitate to contact any of us.