Brexit’s Impact On Property Investment

Learning About Brexit’s Impact On Property Investment

The UK has been planning to leave the EU since 2016, and without a clear plan as to how the country will depart after 29th March 2019, the EU and UK agreed to push the deadline to 31st October 2019. Theresa May faced a no-confidence vote and repeatedly saw her withdrawal deal proposals rejected in the House of Commons. This necessitated her to stand down with the country needing a new Prime Minister and a compromise deal with just over four months left. With so much uncertainty surrounding Brexit, it’s still unclear how it will affect the UK property investment market. Some of the possible outcomes include:

Affordable Property

With the political mayhem in Westminster ever since the 2016 EU referendum, the housing market has recorded its lowest sales for over a decade. 2018 saw the slowest house price growth across the UK, increasing by just 1.02%. The 2018 housing market was subdued and more of the same is expected in 2019. Over the Brexit period, some areas across the country have seen a slump in initial property values. This is good for investors who wish to acquire property given how the market is bound to recover. Property investment is cyclical and getting in on the action before the Brexit vote can be an excellent long term investment.

Rise Of Regional Hotspots

Places like London have seen rental yields shrink with private and public investors taking to places like Liverpool, Manchester and Luton. This influx of investment has seen tremendous improvement in their transport links and infrastructure. With the imbalance of supply and demand in the UK’s property market, the government pledged to build 300,000 new houses by the mid-2020s. This flurry of property investment in regional hotspots has given the construction industry and developers the chance to combat the national housing shortage and increase the house price growth over time. Also, affordability in major cities is a concern making workers increasingly likely to go to commuter towns such as Luton to look for opportunities.

Property Price Slump And Foreign Investment

Towards the end of December 2018, amid political uncertainty in Westminster, there was a 19% house price fall. This initial slump isn’t that bad with the long term picture painting a steady property price growth across the UK within the next five years. This slump has seen foreign investment into the UK property market remain particularly high with top-end properties continuing to sell. External investors are looking to take advantage of the weakened pound due to the downward trajectory of the pound since June 2016. Regional hotspots are benefiting from these massive injections of foreign and domestic capital. The HMRC revealed that in the year following the Brexit vote, there was a 50% spike in prime property sales.

With Boris Johnson set to take over as the new PM, we can only hope he can lead the country to a formal agreement with the European Union. If the MP’s are still on an impasse, then it would necessitate a new public vote via referendum or general election. However, people should have faith in the UK property market and its ability to weather the Brexit storm.