A short while ago the unthinkable happened.
No, I’m not talking about the news that Top Gear lost another presenter, but about the fact that house prices and the weather were dumped as the top dinner party conversation topics by politics and the European Union.
The UK referendum vote to leave the EU will clearly have far-reaching consequences across many areas of our lives, and housing is no exception.
The current sense of uncertainty will affect the decision making of many people, be they first time buyers, seasoned buy-to-letters, institutional investors or renters.
Rumblings on the grapevine suggest that viewings, enquiries and sales volumes have eased on new-build sites. Some people are postponing purchases to work out what’s going on, choosing to stay in or move into the rental market.
Arguably for some, a price adjustment could be exactly what the UK housing sector needs. All I can do is comment from our position as an institutional investor.
Our UK residential strategy remains unchanged and we continue to seek new opportunities, including more deals with housebuilders.
The case for institutional investment in the private rented sector (PRS) is still very much intact and has potentially become even stronger in the face of current uncertainty in the wider property market.
Residential’s low correlation with commercial property is likely to serve it well. The sector proved its defensive characteristics during the steep market downturns in both the 1990s and 2000s, when residential property not only recorded a smaller capital decline than its commercial counterpart but also recovered its initial value faster. Pension funds and other long-term institutional investors are very much aware of this.
In the short term, of course, there is likely to be volatility in capital values, particularly prime central London - which was already showing signs of slowing down before the referendum. It could be the most affected resi sector, but some of that pressure could be offset by the competitive exchange rate attracting foreign investment.
I believe that people will still want to visit London (and the rest of the UK) for business and pleasure, and that international students will still want to study here.
Construction of new homes is already falling well short of demand and, in the current climate, that gap is likely to widen even further. This in turn will further support capital values and rental growth.
We continue to see attractive value and income potential in quality built-for-rent developments in areas of economic strength and employment. Asset and land pricing is currently an issue but, when the dust settles, a quick recalibration will help onward investment flows.
In or out of the EU, people will still need quality housing and, with the backing of institutional capital, the residential market should and will remain very much open for business.
Alex Greaves is head of residential at M&G Real Estate