It’s finally over. The ten-week tirade by the country’s most cherished politicos, celebrities and those in between is finished. Unfortunately, our “conscious uncoupling” with the EU has a few more years in it yet. One question was answered on Friday morning, but the decision to leave has opened a Pandora’s box of issues that we need to collectively solve as a country. It looks like we will have a new (and rather ironically, unelected) leader by October, with murmurings of independence referendums and backtracking from members of major parties , not to mention the Labour Party crisis. To further compound our political misery, the economic forecast looks somewhat similar to the weather we’ve seen this June.

Things were beginning to look very gloomy when I tuned into the rolling news coverage on Friday morning, with the Sterling and FTSE diving more than Cristiano Ronaldo. However, once Mark Carney assured us of the Bank of England’s £250bn commitment, there was evidence of a ‘dead cat bounce’, with a brief recovery appearing to steady our stricken ship. We have also seen both the Sterling and FTSE dropping throughout today, far more than some commentators expected. There is also fear that the economy may dip back into recession, something we have been flirting with for a while now.

A big decision that the Bank of England now faces is just what to do about interest rates. It looks as if they may well be lowered to 0% to encourage people to borrow and spend, and in turn adding the potential for inflation to reach up to 4% in the short term. A weaker pound, more expensive imports and higher labour costs (possibly due to less labour from overseas) could see inflation begin to spike beyond 2018–19, which could see interest rates pick up later on. Even if we are currently on the brink of recession, I don’t think I’m being too optimistic by saying we can expect see medium and long term recovery.

But will the property market freeze over?

While we could see house prices drop in the short run due to a blow in confidence and fewer overall buyers, with some expecting as much as a 20% fall.

Prices should begin to bounce back due cheaper borrowing caused low interest rates and cheaper mortgages. The shortage in housing supply and new homes will cause demand to exceed supply for years to come, which in the long term will maintain price growth. Another benefit, although for foreign investors, is that the relative cost of purchasing a property in the UK has just fallen dramatically, due to the Sterling’s drop in value.

So can the current complexion of the housing market, cheaper borrowing costs and lower Sterling value help avoid the property market stagnating? If you take regular buyers purchasing properties for residential purposes into consideration, the lack of confidence amidst even greater uncertainty and lower sale prices may deter them, which is everybody’s fear. It will have a lower effect on landlords and commercial buyers, as they are buying additional properties.

Where does this fit with Auctions?

Is it just business as usual? A hike in interest rates is likely to lead to a flood of supply entering the market; from current investors who have just had their borrowing cost increase.

That does not mean that lower interest rates automatically equates to less stock. We have already been running at record low interest rates, so a further fall is unlikely to deplete stock dramatically. What might prove tough is uncertainty over what happens next and whether the UK actually files their Article 50 notice. In the short term, sellers may hold off selling until they have more certainty of economic outlook.

While there may be fewer properties available, lower rates would likely encourage more buyers. From a vendor’s perspective, if demand is high, there is no reason why they cannot achieve a strong sale price. The message is therefore clear — sell your property by auction to achieve a strong sale price. 

While businesses in many sectors have warned of the numerous detrimental effects of Brexit to real estate, the auction market has a core of investment orientated buyers and sellers that may be less sensitive to the peaks and troughs in the wider market. In this regard, we believe any storms can be adequately weathered.

It is common for people look backwards in this market, but only confident, forward thinking will lead to increased sector growth. At Bamboo Auctions, we are striving to increase the reach of auctions over and beyond 2% of the market. Change brings opportunity and innovation is key to success. As demonstrated in our previous blog, Looking forwards: Our economic analysis of the auction market, an online auction is the perfect way to attract more vendors and negate the potential drop in supply that we might face in the near future. Now is the perfect time to innovate and capture a wider share of the real estate market.

Bamboo Auctions builds technology with your branding allowing buyers and sellers to exchange online, immediately at the end of a specified time period. For more information or to arrange an online demonstration call 0330 088 9659 or email hello@bambooauctions.com