Known unknowns more attractive to buyers than unknown unknowns

More evidence emerged this week that, despite the unprecedented politico-economic environment we find ourselves in, there is life in the residential property market yet.

Official data from HMRC showed that transactions last month, at just under 102,000, were up 5% on August and 2.3% on September of last year. Now the property market is by no means firing on all cylinders, but neither have transactions ground to a halt.

There are hard and soft reasons why the market continues to tick along. The hard reasons are:

• Ultra-low mortgage rates enticing people to buy before they potentially rise
• A strong and resilient jobs market (employment levels remain at near record highs)
• More affordable house prices after the 3-year cool down following the EU Referendum result
• Below target inflation (currently at 1.7%) and improved wage growth, reducing the pressure on households 

Meanwhile, the soft - sentiment-based - reasons why many people continue to transact in the current market include: 

• An awareness that buying conditions, in pure terms, are almost ideal at present
• Concerns that if the sky doesn’t fall in after Brexit, house prices could rebound, impacting affordability
• Concerns that if Brexit does prove as messy as some predict then we could be in for a ‘Credit Crunch Part Deux’
• Worries that even if there’s no Credit Crunch post-Brexit, mortgage rates could rise sharply to reflect the increased level of risk

In the words of former US Secretary of State for Defence, Donald Rumsfeld, people are choosing the known unknowns that exist now rather than risk the unknown unknowns that could emerge post Brexit.

In that sense, it’s no surprise that transactions are ticking along. In the cold light of day buying now before Brexit may arguably be the rational course of action.