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Iceni Magazine | March 22, 2019

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How Will The UK Property Market Fare After Brexit

How Will The UK Property Market Fare After Brexit

You may be forgiven for thinking that Brexit signifies doom and gloom for the UK.

It is the single biggest issue in the UK for decades, and the constant media reports and government in-fighting don’t make for happy reading for anybody. But when it comes to buy to let property investment, the market looks set to be a great bet in these trying and uncertain times.

British bricks and mortar has long been known as one of the most stable asset classes in the world. Regarded as trustworthy, secure and profitable, the property market has weathered bigger storms than Brexit, even in recent history. It survived the global recession of 2008, before pulling through the housing market slumps experienced during 2009 and 2010.

Under a quarter of the British public believe that Brexit, deal or no deal, would not have an ultimately negative effect on property prices. A third believed prices would remain much the same, while nearly half (42%) believe leaving the European Union would cause a rise in property prices across the UK. The positive outlook maintained by the British public grows as time goes on. Over half (53%) possess an optimistic long-term view that prices will rise steadily over the next five years.

Any unpredictability certainly hasn’t affected the views of overseas investors. The second half of 2016, in the immediate aftermath of the Brexit referendum, saw investment in the UK property market from Singapore hit £2.1 billion. The previous six months had seen £1.9 billion invested.In UK purpose-built student accommodation (PBSA) alone, overseas investors almost doubled their market share from 35% to 64% in the 12 months after the referendum.

Intriguingly, is the North West of England that has seen incredible growth even in the wake of Brexit. Since January 2018, enquiries from Chinese investors into Liverpool property have increased by 160%. In Manchester, enquiries jumped up by 256%. Leading property firms such as RW Invest find that their North West properties are the subject of high and continual interest from home and abroad. The market’s appetite and demand for high-end, luxury property shows no signs of abating.

The weak and erratic pound, experiencing a fall of 12.5% against the Euro since June 2016, has encouraged overseas investors. Carrie Law, CEO of Chinese property company Juwai, has said that the weak pound “is the new normal”. To investors from China, it is no longer a temporary discount but a “permanent condition”.

Research conducted in 2018 noted that nearly 80% UK-based property investors surveyed believe that Brexit will not affect their long-term strategy. Nor has the referendum result, or the uncertainty that trailed in its wake had any notable impact on how they have conducted business since June 2016. Fifty-three per cent of those surveyed would still rather invest in a traditional asset class like property instead of newer, less stable and unpredictable asset classes like cryptocurrencies. Over three fifths of property investors regard UK property as a safe and secure asset class in the current market.

House prices too have appeared to suffer no ill-effects from Brexit. Between June 2016 and June 2017, the HPI has risen from 111.65 to 117.09; an increase of 4.87%. Brexit has not had the cataclysmic effect on the market that many feared. House prices in the North West are growing at a rate unrivalled across the rest of the country. In the last 12 months, the North West has experienced growth of 5.6%. The national average is 3.1%. London experienced negative growth of 0.7%.

So how will the property market fare even after Britain exits the European Union in March 2019? Based on these numbers and the response within the markets, there seems to be nothing to worry about at all.


 

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