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Property Market in a Post Brexit World
What has happened to date?
The UK’s residential property market has certainly been under the spotlight since the referendum confirmed the nation’s decision to exit the European Union (“Brexit”).
The outcome of that Brexit vote has caused economic uncertainty, halted some transactions and left several questions yet to be answered about how the markets, the pound and UK Investments will fare going forward.
Whilst Brexit threatens to weaken some areas of the British property market some overseas investors have taken advantage of the weakened pound to increase their UK property holdings – often saving as much as 10% compared with prices prior to the vote.
The area of the market most negatively affected is Central London. Prices have fallen as developers seek to tempt buyers with a range of special offers but even so sales of new homes in the central London are down by around 43% since the beginning of the year. Many buyers continue to hold off expecting further reduction in this area of the market over the coming weeks and months.
Outside of London
However outside of the centre of the capital indications are that the market continues to operate in a similar way as it was behaving before the Brexit decision.
It seems that the critical shortage of housing in the UK will cause the market to recover despite a temporary dampening of demand. With some 80% of young renters reportedly “desperate” to get onto the housing ladder demand at the lower end of the market is likely to remain strong for a long time yet.
With banks having access to significant amounts of cash reserves for mortgage lending and with more lenders planning to come to the market over the next few months, the intense competition between lenders should see mortgage rates continuing to remain low and potentially decreasing further, thereby re-stimulating the property market.
The majority of experts share the view that the long-term fundamental of insufficient supply will continue to ensure an appreciating market irrespective of Brexit. The government desperately wants more homes to be built and for a stable housing market environment to be created with more mortgage lending, more investment in housing and greater attraction of external sources of investment into housing. Therefore, with the promise of continuing governmental stimulation any instability and interruption to sales and prices should, argue such experts, be viewed as a temporary blip rather than the beginnings of a longer slow down or decline in the market.
Opportunities to buy in the peripheral of London
As central London suffers an uncertain future, at least in the short term, are there better opportunities for sellers to attract buyers in the Capital’s periphery?
The vastly improved communication links following on from the introduction of Crossrail in a couple of years’ time had already encouraged developers to look to the periphery for new build opportunities and it is possible that Brexit will encourage a rapid increase in the migration of development investment away from the centre to the periphery,
Developers aren’t just concentrating on the Crossrail belt either. Developments as far afield as Peterborough to the north, Basingstoke, Winchester and Southampton to the south and northern Oxfordshire to the west (which all have fast train links to London) are attracting “fully sold” notices. Indeed, properties near to any main line station are likely to attract a healthy premium on price so buyers looking for a bargain in these areas will need to move quickly.
For more information about selling or buying in the UK property market post Brexit call 02072054060 or email firstname.lastname@example.org or visit thehomecloud.xenacia.com