Brexit Effects on UK Property Market.
The UK’s vote to leave the European Union came as a shock to many. Brexit has had a large impact on international markets immediately after the result was announced with the pound falling to a 31 year low against the dollar. The initial reactions and opinions show a mixed opinion with those viewing the UK leaving the EU as a positive and negative in equal measure. Which begs the questions, What effects will Brexit have on the UK property market, the economic prospects of the UK and is a 2008 scale market decline is on the cards?
Brexit: The fall in the pound opening up opportunities for overseas buyers.
Brexit will force large scale change, which can create fantastic opportunities for savvy investors. The uncertainty caused in the wake of the Brexit result has caused the pound to fall dramatically making it more attractive for overseas buyers. There has been notable rise in property enquiries from investors in the Middle East, Asia, and other countries with currencies pegged to the dollar. Buyers from China, Singapore, Hong Kong, UAE and Kuwait to name a few have all been actively seeking to take advantage of the currency volatility in the wake of the Brexit with the opportunity to save up to 12%.
Brexit: Is a similar decline expected as seen in 2008?
In short – No. There are key differences between Brexit and the 2008 global financial crisis. The two events are worlds apart. In 2008 we saw a global financial collapse driven by bad debt and illiquid banks. Now, British banks are 10 times more liquid than 2008, interest rates are at all-time lows and attractive mortgage finance is readily available for home buyers. Mark Carney the Governor of the Bank of England stated, ‘the UK’s financial system has consistently strengthened over the last 8 years and the capital holdings of our largest banks are now 10 times higher than before the crisis.’ UK banks currently hold in excess of £130 Billion in capital and more than £600 Billion in liquid assets. This ensures that there is flexibility to continue to lend to UK businesses and households, even if we experience turbulent times. Additionally, the Bank of England is ready to commit a further £250 Billion of additional funds through its normal facilities. This capital and liquidity offers protection against a 2008 level crisis.
Brexit: UK’s economic outlook and reason to be positive.
The British economy has solid fundamentals, and while market sentiment among the masses may be less optimistic due to Brexit, we must remember that the UK is the fifth largest national economy in the world and strong enough to show resistance to short to midterm volatility during a time of uncertainty. There are a number of benefits which will contribute to a growing UK economy. Such as potential reduction of bureaucratic red tape which was always a downside of the involvement with the EU. A potentially more cooperative tax system, increased foreign investment. It is important to remember that there is already an example of other countries such as Switzerland and Norway who have demonstrated strong trade and political relationships with the European Union without them being an EU member state. It is far from all doom and gloom, the UK is still a stable and democratic country and it’s legal and political framework are to be envied. Not all EU members can be proud of such a long run of uninterrupted political stability. The UK Still have the pound, although depreciated now, it is has never suffered a crisis as the euro has. Although the UK was outside the Eurozone, with our financial, political and economic structures so closely integrated through the EU, the UK was more exposed. Furthermore, there will be more market freedoms now outside of the EU, the UK can return to world markets as an example, can now access cheaper food outside the Common Agricultural Policy. Taking advantage of trade with more efficient producers of food. This is the same as for everything else imported to the UK which will aid the UK’s economic growth as a result cost of essential foods and other goods will come down and therefore wages would go further.
Brexit Effects on UK Property Market
The UK is an economic powerhouse and has a chronic shortage of housing and a growing demand, and property will continue to be a magnet for international from both domestic and international investors. Just announced on the 14th of July, is that there will not be a rise in interest rates, the Bank of England will be conscious that a rise could potentially dampen growth, some are anticipating the interest rate to fall, if this were the case we would see cheaper lending making buy-to-let mortgages become more attractive and people would seek to invest in property over less attractive bonds and savings. The property market has historically been a secure platform for wealth building, a tangible asset with a proven track record. The tangibility will always be appealing and acts as a good hedge to volatile equity markets. Equities can be completely wiped out, where property can’t, offering security to buyers. In any market cycle a good property in a good area will always be in demand and buyers can still receive rental income from a property. The long term security of the UK property market has been tried and tested. Prices could soften over coming months, but the market should be safeguarded by the demand for housing and continued overseas interest. The fundamental market driver of supply and demand will continue to dictate house prices. The UK’s current imbalance, with a continued shortfall of property in the UK coupled with a rising demand should support house prices. And seeing as the UK have missed new build housing targets by almost 1.2m since 2004 and the population is increasing, this will be the case for years ahead. The UK property market still represents a low risk long term investment with reliable yields from long term rentals. If Brexit dampens house price growth, we should expect to see a continuation of the recent trend of investors seeking higher yields, investing in growth areas in the Northern regions. A real value of property is the dual investment streams from capital growth of value, and rental income. What next, well it seems it’s business as usual for the UK property market. In or Out of the EU, people will still need homes and the UK still has a shortage of them, the outcome of the referendum doesn’t change that!
Brexit Effects on UK Property Market.
The UK’s vote to leave the European Union came as a shock to many. Brexit has had a large impact on international markets immediately after the result was announced with the pound falling to a 31 year low against the dollar. The initial reactions and opinions show a mixed opinion with those viewing the UK leaving the EU as a positive and negative in equal measure. Which begs the questions, What effects will Brexit have on the UK property market, the economic prospects of the UK and is a 2008 scale market decline is on the cards?
Brexit: The fall in the pound opening up opportunities for overseas buyers.
Brexit will force large scale change, which can create fantastic opportunities for savvy investors. The uncertainty caused in the wake of the Brexit result has caused the pound to fall dramatically making it more attractive for overseas buyers. There has been notable rise in property enquiries from investors in the Middle East, Asia, and other countries with currencies pegged to the dollar. Buyers from China, Singapore, Hong Kong, UAE and Kuwait to name a few have all been actively seeking to take advantage of the currency volatility in the wake of the Brexit with the opportunity to save up to 12%.
Brexit: Is a similar decline expected as seen in 2008?
In short – No. There are key differences between Brexit and the 2008 global financial crisis. The two events are worlds apart. In 2008 we saw a global financial collapse driven by bad debt and illiquid banks. Now, British banks are 10 times more liquid than 2008, interest rates are at all-time lows and attractive mortgage finance is readily available for home buyers. Mark Carney the Governor of the Bank of England stated, ‘the UK’s financial system has consistently strengthened over the last 8 years and the capital holdings of our largest banks are now 10 times higher than before the crisis.’ UK banks currently hold in excess of £130 Billion in capital and more than £600 Billion in liquid assets. This ensures that there is flexibility to continue to lend to UK businesses and households, even if we experience turbulent times. Additionally, the Bank of England is ready to commit a further £250 Billion of additional funds through its normal facilities. This capital and liquidity offers protection against a 2008 level crisis.
Brexit: UK’s economic outlook and reason to be positive.
The British economy has solid fundamentals, and while market sentiment among the masses may be less optimistic due to Brexit, we must remember that the UK is the fifth largest national economy in the world and strong enough to show resistance to short to midterm volatility during a time of uncertainty. There are a number of benefits which will contribute to a growing UK economy. Such as potential reduction of bureaucratic red tape which was always a downside of the involvement with the EU. A potentially more cooperative tax system, increased foreign investment. It is important to remember that there is already an example of other countries such as Switzerland and Norway who have demonstrated strong trade and political relationships with the European Union without them being an EU member state. It is far from all doom and gloom, the UK is still a stable and democratic country and it’s legal and political framework are to be envied. Not all EU members can be proud of such a long run of uninterrupted political stability. The UK Still have the pound, although depreciated now, it is has never suffered a crisis as the euro has. Although the UK was outside the Eurozone, with our financial, political and economic structures so closely integrated through the EU, the UK was more exposed. Furthermore, there will be more market freedoms now outside of the EU, the UK can return to world markets as an example, can now access cheaper food outside the Common Agricultural Policy. Taking advantage of trade with more efficient producers of food. This is the same as for everything else imported to the UK which will aid the UK’s economic growth as a result cost of essential foods and other goods will come down and therefore wages would go further.
Brexit Effects on UK Property Market
The UK is an economic powerhouse and has a chronic shortage of housing and a growing demand, and property will continue to be a magnet for international from both domestic and international investors. Just announced on the 14th of July, is that there will not be a rise in interest rates, the Bank of England will be conscious that a rise could potentially dampen growth, some are anticipating the interest rate to fall, if this were the case we would see cheaper lending making buy-to-let mortgages become more attractive and people would seek to invest in property over less attractive bonds and savings. The property market has historically been a secure platform for wealth building, a tangible asset with a proven track record. The tangibility will always be appealing and acts as a good hedge to volatile equity markets. Equities can be completely wiped out, where property can’t, offering security to buyers. In any market cycle a good property in a good area will always be in demand and buyers can still receive rental income from a property. The long term security of the UK property market has been tried and tested. Prices could soften over coming months, but the market should be safeguarded by the demand for housing and continued overseas interest. The fundamental market driver of supply and demand will continue to dictate house prices. The UK’s current imbalance, with a continued shortfall of property in the UK coupled with a rising demand should support house prices. And seeing as the UK have missed new build housing targets by almost 1.2m since 2004 and the population is increasing, this will be the case for years ahead. The UK property market still represents a low risk long term investment with reliable yields from long term rentals. If Brexit dampens house price growth, we should expect to see a continuation of the recent trend of investors seeking higher yields, investing in growth areas in the Northern regions. A real value of property is the dual investment streams from capital growth of value, and rental income. What next, well it seems it’s business as usual for the UK property market. In or Out of the EU, people will still need homes and the UK still has a shortage of them, the outcome of the referendum doesn’t change that!
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