Prime Minister Theresa May yesterday triggered Article 50 as Britain confirms its request to depart from the EU, but will the latest events have a consequential negative effect on the property market? Will it potentially be positive news for UK property and the country’s economy? Or will it neither bust or shift the value of your property investments and the property market going forward? The predictions although sketchy aren’t nearly as doomed as they were a year ago. Here’s what some think…
Russell Midgley, Director of Aspen Woolf is confident that the UK market will continue to grow in strength. He explains “UK investors will continue to invest in the domestic property market. We’ve seen huge amounts of activity from investors over the last 12 months and we expect this to continue. We really don’t think much will change. We still have a huge housing crisis across the country and I believe the next 2 years will be very strong indeed. Investors in the UK will choose to invest in their own country instead of buying overseas largely because of the weak pound, which would leave them out of pocket. ”
He stated “I think we’ll see a slight slowdown in foreign activity, especially over the coming weeks whilst there is uncertainty again. Normally this is short lived. As soon as we have direction from Theresa May and her government, we will see this activity ramp up again as things start to become clear. However, we think the current environment is perfect for foreign investors looking to cash in on the weak pound.”
“This entire process won’t be complete for another two years. That is a long time, especially in a world that moves so fast. Who knows, we could even see the government do a 180 at the end of it. You really can’t say. What we do know is that there is demand for housing and a severe lack of supply. This fact hasn’t changed overnight, and won’t change in the next 2, 5 or even 10 years.”
Mark Lawrinson, Regional Sales Director of Portico London estate agents, has spoken out about the possible effects of Brexit on the London housing market, saying, “I don’t think the triggering of Article 50 will affect the property market directly from today. In one sense it removes the uncertainty surrounding when Britain’s withdrawal process from the EU will start, but in another way it will create economic uncertainty until we know what deal we will strike and therefore what Brexit actually means for our country.
Mark continues, “Brexit will no doubt mean a turbulent two years for the London and UK market as we begin to hear what negotiations and proposed deals are being put forward for our exit of Europe and the single market. I think we will see a continued slowdown or lethargic London market when it comes to sales volumes, and as we reported toward the end of last year, transaction volumes across London are already more than half of what they were before the 2008 crash.
London has a significant part to play in businesses who trade and operate across Europe and the world, and a buoyant property market relies on the UK’s economic health. If Brexit negotiations go well this could cause further price growth as the economy grows and we see the nation’s confidence lifted, but equally, if a good deal isn’t reached then the international companies who operate here or look to relocate here might change their minds, reducing the number of residents who live in the capital and again further reducing the transaction levels, which could ultimately lead to price decreases.”
It’s therefore important that you make property decisions based on your personal situation and what you want to do, rather than gambling on how the market will play out.
Robert Nichols, Portico’s Managing Director, makes an important point, stating, “Right now we may experience some uncertainty, but as the negotiations progress, we will regain some much needed stability into the housing market, as people realise that the effects of Brexit are not catastrophic and go on with their lives. We’ll hopefully see transaction levels increase as a result, which are currently dangerously low and affecting price growth across the capital.
He continues, “Wednesdays events are likely to have a much more profound effect on foreign investment however, with the weakening pound expected to fuel demand from overseas buyers and investors.”
Many are also speculating this will mean that the Bank of England will be hesitant to increase their interest rates, in spite of the recent inflation increase. This will it will remain cheaper than ever to borrow and get on to the property ladder.
Many are also speculating that it will mean that the Bank of England will be hesitant to increase their interest rates, in spite of the recent inflation increase. If so it will remain cheaper than ever to borrow and get on to the property ladder.
My own philosophy is this… “The UK is very underrated and has sustained over hundreds of years to be one of the world’s leading trading nations with one of the world’s strongest economies. Whether it’s the breakup of the British Empire or the Brexit from the European Union, Britain will power on regardless as people still need to work, still need to eat, still need be housed, so thanks to the thousands of inventors, entrepreneurs, business owners, civil servants and investors that we have, the economy will tick along, all be it worst case should it take a short term hit on currency rates.”
“The UK will continue to be very investible as a weak pound will not only attract foreign investment, but keep the UK pound investing on these shores, whilst a strengthening pound will ensure continued success for investors with property in the UK and for those savvy enough to look at markets elsewhere.”
“When it comes to buying & selling, the philosophy doesn’t change… Buy low Sell high… Your judgement should not be clouded by economist hearsay and tabloid headlines (because they arguably know as much as you), it should be simply based on facts, and the facts say that on a ten year span since records began, property prices have always grown… For example in 2007 prior to the ‘big’ property market crash, house prices were at an average sale price of £160,000. Today, ten years on the average sale price is £205,000. Not bad for a property market crisis? I predict in another ten years time property will rise again, like it did between 1952 & 1962, like it did over the 70’s & 80’s and from the 90s in to 2000, whether we are fully out of Europe, back in the EU, with Scotland or without, investing in bricks and mortar is about as safe as houses when it comes to investing.”
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Daniel Peacock