Sat on the train this morning listening to two gentlemen talk. One was telling the other that the sale of his house had fallen through because the buyers he had lined up had withdrawn because of Brexit. They'd managed to re-arrange the sale with the second person in the queue, but was disappointed because it had knocked the whole process back by a couple weeks. His friend was surprised, saying "Didn't these people realise that we won't see any changes for a couple of years?".
The irony of it is that he's commenting on an immediate change by saying that there won't be a changes for years to come yet.
Apparently the people had withdrawn on the Friday, the day after the vote. Again, the speed of the reaction seemed to surprise them both.
I can see why people would drop out of a house purchase, and quickly at that, after the Brexit vote. A house purchase is a huge commitment for most people, and a long term one. If something as massive and potentially destabilising as Brexit happens, and you have any doubts, the sensible thing to do is to back off, pause, and assess how it is going to affect you. If you're not fully committed in a house purchase you pull out.
Indeed some overseas banks have already stopped giving loans on London properties because of concerns over Brexit (Singapore bank halts lending for London properties over Brexit vote). No bank wants to give a loan on a property based on a value that then falls by 15% or 20%. The value of the property is the bank's security against the buyer defaulting on the loan, so they need to be sure that they will get all their money back even years down the line.
Going forward, this may move us back into the scenario we were in a few years ago where banks starting asking for large deposits from buyers so the risk of a price drop is borne by the buyer not the bank. This will block a lot of people, especially first time home buyers, from entering the market. Which in turn could lead to a further collapse of house prices and the housing market.
A downward spiral, caused by the fear, uncertainty and doubt, of the Brexit vote.