Opinion: Brexit chaos is paralysing entire housing market including sales of agents themselves

Here are my thoughts on the Brexit chaos. Are they yours?

During my 40 years in the property industry I have never seen an event that has paralysed the market so totally as Brexit.

I have clients in almost every market sector and almost every one of them is complaining about the devastating impact that the uncertainty has had on their business.

A big town planning firm told me that their income has fallen off a cliff because developers are not applying for consent for new schemes.

A quantity surveyor client complained that nearly all his projects have been delayed because developers are so nervous about starting new schemes.

And my residential estate agency clients, particularly those in London and the south-east, are complaining that every single  one of their key performance indicators are down.

There are fewer valuations, fewer valuations convert to instructions, buyers are reluctant to make offers and sales are not completing because everyone is waiting for Brexit.

Severe impact

The impact on my own business, which brokers sales and purchases in the estate and lettings agency industry, has also been severe.

The value of a good managed letting business has dropped by 25% since the Brexit vote.

The value of a let-only business has dropped by 50% and the value of a sales business by 75%.

As a consequence, many sellers have delayed putting their businesses on to the market in the hope that prices will recover.

Worst of all, though, is that the sales that have been agreed, are not completing as the buyers and/or their funders are waiting for a resolution of Brexit.

This is grossly unfair on people who have worked hard all their lives only to find that they have to postpone their retirement through no fault of their own.

To be precise, though, most people are not waiting for Brexit to be completely resolved, which may take years.

Life will go on – but it will be chaos

Most people realise that regardless of whether we get Mrs May’s deal or a Norway type deal or a customs union, or even if Brexit is cancelled altogether, life will go on and people will find a way to adapt to the new regime.

But what is terrifying everyone is the chaos that we are told will ensue if we crash out of the EU with no deal.

We have been told that there will be food shortages, no medicines and no aeroplanes.

We have been warned that our computers will stop working and that there will be no gas or electricity.

We have been told that house prices will be fall by 35%, that GDP will fall off a cliff and that unemployment will go through the roof.

We have even been told that there will be troops on the streets to enforce law and order.

Who knows how much of this is scaremongering and how much could be true? But it really doesn’t matter.

People are delaying until they know

What matters is that the slightest chance of disruption on this scale is enough to make people delay buying a house or a business or taking on a new employee or making any other important decision until the threat has passed, and the cumulative impact of this on the prosperity and wellbeing of our country is catastrophic.

I have always had low expectations of this government but the least that we should all be able to expect from any government is that it will maintain the basic conditions necessary for people to enjoy their daily lives.

This means that we need law and order and the basics such as food, water and electricity.

If a no deal Brexit is threatening even these basic ingredients of our lives, then it needs to be taken off the table immediately so that ordinary decent working people can get on with their daily lives.

The current situation is a shambles and our politicians should hang their heads in shame that they have allowed it to happen and to continue for so long.

* Adam Walker is a management consultant and business transfer agent who has specialised in the property sector for 40 years   

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12 Comments

  1. mattfaizey

    Or,

    Competitors are going out of business, assets and plant can be bought cheaply. It is easier to readjust and prepare as quieter.

    The bigger the stall, the bigger the rally.

    The less competition when that rally comes the more hay there will be to make.

    Situation may be s11ite, and may be super tough for all of us, it is not without its opportunities however

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    1. P-Daddy

      The market was over hyped and headlines fuelled by Help to Buy; housing shortages; corporate agents employing M&A specialists who clearly didn’t know how to look at cash flow, profit and intrinsic value when paying over the odds to expand their networks and grab lettings portfolios whilst management consultants state the obvious after the event. The banks control the market now that their herd mentality has been challenged and the reality of the risk of indebtedness. The headlines of Express and Mail land now fuel sentiment and anger. Brexit is nothing compared to the credit crunch or indeed the leveraged buyout and junk bond days of the 80’s and early 90’s. Markets just never learn…boom and bust rools ok! Greed still rules. Brexit is not the cause, but is a catalyst for the pessimists but over debted economies and a global system that spreads financial shocks like a contagion are the cause. The worlds economies are close to the edge…China, Russia, Italy, Brazil, Venezuela, Spain, Portugal, Greece, Turkey and even Moldova where the ex president managed to run off with 12% of the GDP!!

      Now if any of you think you are getting near my stockpiled baked beans and bananas…be warned I will defend them to the death!

      Moving on…

       

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  2. HertsLocalagent

    Agents always have and excuse.

    ”no one is viewing because the suns out”

    ”no one is viewing because it’s cold”

    ”transactions are down because of brexit”

    If your house is not moving the price is too high it’s a simple as that buddy.

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  3. henrymarr80

    I don’t agree that the value of Lettings businesses are down 25% because of brexit. They are down 25% because  of the tenant fee ban which is many agents profit margin

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    1. surrey1

      Not seeing much/any new buy to let sales since 2016, a few offloading since further tax changes not helping grow the lettings biz either.

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  4. Countrybumpkin

    I don’t find it strange that in a tough ride, all the free riders are panicking. Granted, I won’t be spending money on entrepreneurial speakers (sorry Adam) as no one knows how long markets last. The good agents adapt quickly and theses markets sort the wheat from the chaff. Sellers start seeing value in an agent and do not mind paying a proper fee to get the job done. I guess that’s where experience of previous peaks and troughs helps.

     

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  5. DASH94

    Brexit is a handy hook to hang excuses on – it’d be very dangerous to sit back and think it’ll all be OK come March 29th though.

     

    I would agree that everything feels a bit stifled by all of it at the  moment, but the biggest reason for Estate Agent problems is the continued Landlord and Agent bashing by government and flipping Shelter.

     

    In or out of Europe – we’re in for a rough ride,

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  6. Copeland sales lettings

    The market is very boyant in the North East, we might not get the prices rises like the South South Est but property is selling and renting very well where we are.

    Just because you guys haven’t had your annual 5 – 10% annual increase it’s doom and gloom. It’s about time you guys had a slump we’ve had 1 up here for 10 years but no one gives a ….

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    1. DASH94

      “Just because you guys haven’t had your annual 5 – 10% annual increase ”
       
      I wish!

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  7. James Wilson

    What a load of absolute rubbish in this piece.   The market for property in the UK – at the top end at least – is not being affected by Brexit.  Buyers are shy because anyone with half a brain can see that the risks are stacked heavily to the downside.   Interest rates can’t get any lower, AML is much tighter now, property taxes are only going to go up and prices are WAY overvalued versus all historical norms.   The Baby Boomers who own all the property in Britain are all going to be selling in the next 10-15 years and I just don’t see where the demand is going to come from at these levels.   The realisation of these facts is what is killing sentiment.  Not Brexit.

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  8. Bigbee73

    Hi Adam,   I understand and share a lot of your frustration, however, you have covered many different subjects here. Whilst i was a firm ‘remainer’ and I cannot believe the small mindedness of the ‘leavers’, we are where we are! The London and South East property market has been very over valued for a long time and a “correction” every decade, if required, is not a bad thing! A lot of businesses that are closing, were not well run businesses. Whilst there is nothing to stop a good Agent from running a poor business, they should learn and move on/up! If there were more regulation on setting up the business in the first place, this may have had a positive effect. There is no doubt things will be chaotic and the rest of Europe will be laughing their heads off, at the shambles we have inflicted upon ourselves. Yes, I believe Theresa May is a stubborn, not quite as educated as I thought kind of lady but she was elected by the party that were themselves elected by us. We all need to accept a little responsibility for where we are! For the record, I work in London, as an Agent and live in the South East..

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  9. The Property Marketplace

    On the brighter side houses will be worth their real value which is less than 50 percent of their current value.

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