The UK has woken up this morning to a vote to leave the EU, the Prime Minister is also to leave office before October and the markets are all over the place. So now what?
We need to look forward to where we go from here. Britain now has a mandate to reassert itself in global markets and renegotiate relations with Europe on its own terms.
And how will this affect the property market? Although we were already experiencing stagnation in the sales market (particularly in the past 2 weeks when the market came to a halt), resulting from increased SDLT and the new tax requirements that are applied to overseas purchasers, the ‘Vote to Leave’ presents an interesting conundrum.
We expect the property market to further slowdown and the pound to be weaker amidst volatile conditions on the financial markets, at least in the short term, but that does make the UK more attractive to overseas investors. Many global investors will take advantage of this, just as they did in the immediate aftermath of the last financial crisis. Many are anticipating that Dollar buyers (Asians, Americans & MiddleEasterns) will see this as the perfect opportunity to buy a property in London, particularly as prices will most likely continue to go down (some say 20%). Obviously the fall will be bigger at the top end of the market.
On the corporate front, it is likely that major multi-national employers will wait to see how the economy pans out before making radical changes. If so, we could expect a boost to lettings markets as more overseas employees wait to see what their prospects hold before buying a home here. There is consensus that rental prices are likely to remain the same.
Longer-term, if the UK is seen to prosper after Brexit, could this trigger other EU members to follow suit? If so, that would only enhance the push factor for investors to look again at Britain and we could see EU citizens or British expats relocate here, or capital flight from more global investors seeking a safe haven in prime central London property. Demand for London homes to buy is highly likely to remain strong, and the city will still dominate as a global capital.
While currency rates stabilise and confidence returns to the property market, the clearing economic outlook should present a great opportunity for those bold enough to seize it.
At Address Property Consultants we have experienced consultants that will be happy to answer any queries that you may have, so if you have any property-related queries please do not hesitate to contact us.
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