UK Vote to Leave the EU | What does it Mean for the Property Market?

UK Vote to Leave the EU | What does this mean for the UK property market? Cheaper pound lures overseas property investors from the Middle East and Asia.

The results are in. The UK Vote to Leave the EU | But what does it mean for the property market?

The UK voters have spoken and the results have been announced from Manchester Town Hall. The UK will exit the European Union. They will now begin a estimated 2 year process of exiting the EU. What does this mean for property investors? The Exit from the EU means that the UK Government and corporate Britain renegotiate trade agreements, and there is a large degree of uncertainty which will ripple through the market. It is anticipated that the UK now faces a period of uncertainty. The UK has always been attractive as a nation for trade and openness. Managing Director of the International Monetary Fund (IMF) Christine Lagarde, anticipated that, the UK leaving the EU would be “pretty bad to very bad” and this would result in a “protracted period of heightened uncertainty”. Furthermore, The UK Treasury, the Organisation for Economic Cooperation and Development (OECD) and the IMF are of the believe that Britain will be permanently poorer because in the event of a ‘Brexit’ due to decreased trade with the EU. George Osbourne Chancellor of the Exchequer suggests that British house prices could fall by up to 18 percent if the country leaves the European Union, however many journalists and commentators have dismissed this claim as scaremongering in order to shape the opinion of the electorate. Contrary to this the fall in the strength of the pound which is likely to continue in the coming months, is set to encourage overseas investors

UK Exit the EU & the Pound Falls

The cash rich from china Asia, and the Middle East are expected to snap up property below value, with the anticipation that prices will continue to rise despite the UK’s exit from the EU. These value buyers will see property in the UK as great value, as their strong currency means their money will go further in today’s climate.

UK Exit the EU, An Opportunity Property Investors

Also expected is a rise in the number of UK expatriate buyers who will have an excellent opportunity to re-allocate funds back to the UK with plenty of opportunity to buy property for cheap, in relative terms. Developers and borrowing, due to the uncertainty, this may put off property developers and house builders from taking on board new projects, this may in turn have a significant effect on the already stretched housing stock. This will restrict the flow of new properties coming to the market in the next few years. In a market which is already critically undersupplied this will act to strengthen the floor price of the UK housing market. With Mortgage rates anticipated to climb, end users seeking to get a foot on the housing ladder, will again struggle. Even if prices do begin to fall, the higher interest on mortgage repayments will push affordability further out of reach for many. This again benefits the cash buyer who can speculate in the current market. Despite the UK Voting to Leave the EU, Investors will continue to seek property for good value, and this in a market which has been rising in recent years could present an excellent window of opportunity to find good value property for sale in the UK. Hanover Square will continue to bring you all the latest news and commentary regarding the UK’s housing market. Please check our website for further information.