Despite a majority vote of 62% in Scotland, and 74% in Edinburgh to remain in the European Union, the UK has voted to leave by a majority of 52% to 48%.
The short term impact of the referendum result has been felt most keenly in foreign exchange and stock markets with Sterling weakening significantly (Sterling has dropped to its lowest level for over 30 years against the US Dollar) and major falls in UK stock market. The uncertainty in the markets has been further exacerbated by the political fallout that has developed since the vote, with the announcement that the Prime Minister is to resign and turmoil within the Labour Party.
The timetable for the withdrawal of the UK from the European Union (whatever that may look like) is likely to take a minimum of 2 years so the uncertainty is likely to continue for some time to come. There is no doubt, whatever your view on the outcome, that businesses are likely to pause to consider the future and evaluate their plans. This will have an impact on both financial markets and the wider economy in the short to medium term
The outlook for the Edinburgh property market is also uncertain; however, property values and returns from property have historically been less volatile than other financial assets over the medium to long term. Some of the fundamentals attractions of investing in the private rented sector may remain largely unaffected with high demand for quality properties matched with a continued shortfall of supply.
There is a risk that the sales market may see more of an effect as potential sellers and buyers defer their decisions until there is more certainty about the future. Although there are parallels to be drawn with the situation during the credit crunch in 2008, there are (currently) significant differences particularly in terms of the availability of finance to fund property purchases. Some commentators have argued that the cost of finance may rise as interest rates are raised to counter inflation resulting from a weaker Sterling. In contrast, other commentators have argued that the Bank of England will be forced to reduce interest rates to support the markets and the wider economy.
We are continuing to monitor any development that may affect the property market however, the outlook is currently very uncertain and is likely to remain so for the foreseeable future.