Brexit: leaving the EU could help London's first-timers get on the property ladder

As the referendum leave vote potentially causes the housing market to take a tumble, it could mean relief for first-time buyers trying to get a foot on the capital's property ladder. 

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On Friday we got the decision Londoners very clearly didn't want. London is an open, cosmopolitan city that embraces diversity. I am proud to live here. This national turn inwards the vote represents has left many Londoners reeling and how we proceed from here will have deep  implications for the city's property market.

But importantly, this is not 2008 and the turmoil in markets could be good news for young buyers desperate to get on the property ladder;  the possibility of cheaper house prices combined with continuing historically low financing may be just the tonic they need following last night's shock.

The crash of 2008 was a cash-buyers dream. For everyone else it was a nightmare. London’s property prices fell by half and there were bargains galore. Unfortunately, the majority of Londoners had to watch from the sidelines.  Banks were in trouble and mortgages were hard to get. For those who could access lending, the prospect of sweeping redundancies stalled many buying ambitions. In the end it was investors from the UK and abroad who helped drive a steady recovery in the capital’s property market while much of the rest of the country’s property scene  stagnated.

This time will be different. Last night’s decision is not a global crisis, but a home-grown shock. There will be fall out, but how much and for how long depends on how well we negotiate our exit. If the Treasury’s Brexit forecast is correct, house prices could tumble by up to 18 per cent as a result of the exit vote.

This will not be welcome news for home owners, but neither is it a catastrophe. London’s house prices have seen double digit growth for years. Even a 20 per cent fall is likely to leave many Londoners only setting their price expectations back a year or so.

What does seem likely is that there will be no quick fix. Exit negotiations will take years. After that we need to see how we fare in our brave new world. No market likes uncertainty. Just the lack of clarity generated by the referendum vote itself caused the biggest fall in the number of people seeking to buy a property since the financial crash.

For London’s desperate buyers, a protracted cooling of prices could be the opportunity they’ve been waiting for. Mortgage rates are low,  and unlike 2008 financing looks set to remain available.  Should trouble arise, Governor  Mark Carney has already said that the Bank of England is standing ready to provide £250bn in additional funding to keep the system moving.

Further liquidity measures can also not be ruled out. All this should mean that if prices do moderate as the Treasury expects, all Londoners (not just cash buyers) will be in a much better position to pounce. 

In contrast, our international friends may not be as keen or able to jump in. Immigration concerns were at the forefront of the exit campaign.

If this leads to a dampening of foreign demand for London living, it is likely to be another downward pressure on house prices – particularly in the prime districts. But this could also mean that Londoners' concerns about apartment blocks being snapped up by foreign investors and being left empty, will begin to dissipate.  This would be good news for buyers and renters alike. 

Last night's momentous decision will impact London’s property market for some time. For property owners it is likely to mean a lengthy  period of uncertainty and challenge. And as we progress down what will be an unfamiliar road, things may get much worse before they get better.

However,  for those plucky Londoners who are willing to take the plunge, potentially more affordable housing alongside accessible and cheap financing may provide some welcome opportunities and relief.   

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