Taylor Wimpey, one of the U.K.’s largest housebuilding companies, has this week announced half-year results which showed profits increasing by 9.1%. Even though these figures are credible in the current market it was the opinion of the company going forward which caught the eye of many analysts. Let’s not forget that some “experts” had been forecasting a reduction in London property prices to the tune of 20% in light of the referendum result to leave the European Union. So, how does Taylor Wimpey see the situation panning out?
Interestingly the company confirmed it had seen no impact from the EU referendum result despite the doom and gloom circulated by many so-called experts. This is not the first company in the UK housebuilding sector to portray a more positive environment for the UK property sector going forward. Some would suggest it is too soon to say with any great certainty how Brexit will impact UK property but so far the collapse in confidence and property prices has not materialised.
One interesting issue buried in the Taylor Wimpey statement was the fact that the UK mortgage sector remains extremely competitive which would suggest a buoyant property market. Indeed the company’s internal measure of customer confidence and those carried out by unconnected third parties also suggest a resilience very few people had seen coming. It is also interesting to see the Bank of England has already stepped in to suggest it would support the money markets in the event of a tightening of supply.
Whisper this under your breath, there are even analysts emerging from the woodwork to suggest that the long-term prospects for the UK property market have indeed improved in light of Brexit. It will be interesting to see if this particular train of thought does emerge because at this moment in time we are starting a journey into the unknown.
It would be unfair to suggest we have not seen any wobbles since the referendum result, with a recent business confidence report suggesting a more standoffish approach from companies. However, if we look towards the UK stock market the leading indices have all recovered their initial losses in light of the referendum with the FTSE 100 actually substantially higher.
Even though investor sentiment may be fragile at the moment, with many still sitting on the sidelines awaiting developments, it is hugely encouraging that the forecast reduction in confidence has not really emerged. There is even talk that the European Union is working on a compromise deal with the UK government which would give access to the single market and partial control over immigration. Despite initial comments, seen as bullying by the European Union, common sense is now starting to prevail which can only help the UK economy, investor sentiment and general confidence going forward.
Try as they might, the doom and gloom merchants are having great difficulty impacting the long-term confidence that UK property investors seem to have in the UK market. A number of leading investors are now suggesting any setback in the UK property market in the short to medium term should indeed be seen as a long-term buying opportunity. The longer this general feeling of long-term confidence prevails, the less chance of the predicted collapse in UK property prices.