What does Brexit mean for the property market?
In determining what impact Brexit will have on the property market, it is important to be aware that no one knows what is going to happen in the near future. The political landscape of the UK has changed considerably with the major parties in England and Wales in turmoil, so this means that uncertainty is likely to be the key aspect in the market in the short to mid-term.
This means in the short term, people shouldn’t expect major movement or development in the UK property market. However, if we take the long term view or try to determine what will happen from the likely effects of Brexit, there are some reasons to be positive about the market.
Many factors influence the property market
While there are many different factors that impact on whether people are looking to buy a property or not, one of the main factors is income. At this point in time, this isn’t something that looks like being too affected by Brexit. Yes, some people will find that their employers may be negatively impacted upon by the Referendum vote but conversely, there will be firms and employees benefitting from a more stable platform or brighter future. There is every chance that the positives and negatives in the market will be balanced out, and this should mean that the property market isn’t affected too much.
When it comes to the level of foreign investment in the United Kingdom, there are a number of things to take on board. While much of the focus in the lead-up to the Referendum vote fell on immigration, the immigration being discussed wasn’t the sort of movement that buys up expensive houses or invests in land or property. Even if the rules and regulations regarding over who can come to the United Kingdom are re-evaluated and tightened, there will still be opportunities available for firms and people looking to invest heavily and bring money to the UK.
The overall impact of Brexit remains to be seen
If there is a fall in the number of EU businesses and individuals operating in the UK, the campaigners of the Leave vote insist that these investors and people will be replaced by companies and investors from around the world. In looking to determine the UK landscape in a post Brexit environment, any area of concern has a potentially beneficial side attached to it, so it is difficult to say if there will be much of an impact on the economy.
One slight blow in the market comes with the weakened £ and the fact that this will make building materials from Europe more expensive. However, a weaker pound against foreign currencies can strengthen foreign businesses and resolve to invest in the United Kingdom, so this economic factor may draw more people to the UK.
With respect to pricing, various parties have suggested that house prices will fall. This is the opinion of Chancellor George Osborne and has been backed the Bank of England with Governor Mark Carney stating that the Brexit vote could lead to a technical recession. There will be many potential buyers cheered by the thought of falling house prices and this could lead to a swell of demand in the property market.
The thing is though, if the market does move to a recession, the steps taken to balance the movement or stimulate the economy can all impact on the property market. Yes, if there is a recession, the cost of mortgages may rise but equally, the Bank of England may take steps to reduce interest rates which means that this may not be much of an impact.
Depending on your personal opinion about the outcome of the Referendum vote, you’ll find that you are more willing to accept certain predictions regarding the future of Britain. There are logical economic arguments that suggest conflicting changes in the UK property market, and until there is clarity regarding the future of the UK in relation to the EU, it is difficult to say what will happen.
However, one constant factor in the property market is that when there is uncertainty, there is an opportunity for many people, which means that there may be good deals or investment opportunities available to people who are looking for ways to enter or strengthen their position in the UK property market.