British Prime Minister Theresa May has now triggered Article 50 as planned, beginning the process of the UK leaving the EU. But what effect will today’s events have on the UK’s property market? The Property Investor talks to Russell Midgley, Director of Aspen Woolf and Mark Lawrinson, Regional Sales Director of Portico London estate agents.
Russell Midgley, Director of Aspen Woolf, winner of Best Residential Investment Provider at the Property Wire Awards 2017, told The Property Investor that he’s confident that the UK market will continue to grow in strength. He said to The Property Investor: “UK investors will continue to invest in the domestic property market. We’ve seen huge amounts of activity from investors over the last 12 months and we expect this to continue. We really don’t think much will change. We still have a huge housing crisis across the country and I believe the next 2 years will be very strong indeed. Investors in the UK will choose to invest in their own country instead of buying overseas largely because of the weak pound, which would leave them out of pocket.
“I think we’ll see a slight slowdown in foreign activity, especially over the coming weeks whilst there is uncertainty again. Normally this is short lived. As soon as we have direction from Theresa May and her government, we will see this activity ramp up again as things start to become clear. However, we think the current environment is perfect for foreign investors looking to cash in on the weak pound.
“This entire process won’t be complete for another two years. That is a long time, especially in a world that moves so fast. Who knows, we could even see the government do a 180 at the end of it. You really can’t say. What we do know is that there is demand for housing and a severe lack of supply. This fact hasn’t changed overnight, and won’t change in the next 2, 5 or even 10 years.”
Mark Lawrinson, Regional Sales Director of Portico London estate agents, spoke to The Property Investor about the possible effects of Brexit on the London housing market, saying, “I don’t think the triggering of Article 50 will affect the property market directly from today. In one sense it removes the uncertainty surrounding when Britain’s withdrawal process from the EU will start, but in another way it will create economic uncertainty until we know what deal we will strike and therefore what Brexit actually means for our country.
Mark continues, “Brexit will no doubt mean a turbulent two years for the London and UK market as we begin to hear what negotiations and proposed deals are being put forward for our exit of Europe and the single market. I think we will see a continued slowdown or lethargic London market when it comes to sales volumes, and as we reported toward the end of last year,transaction volumes across London are already more than half of what they were before the 2008 crash.
London has a significant part to play in businesses who trade and operate across Europe and the world, and a buoyant property market relies on the UK’s economic health. If Brexit negotiations go well this could cause further price growth as the economy grows and we see the nation’s confidence lifted, but equally, if a good deal isn’t reached then the international companies who operate here or look to relocate here might change their minds, reducing the number of residents who live in the capital and again further reducing the transaction levels, which could ultimately lead to price decreases.”
It’s therefore important that you make property decisions based on your personal situation and what you want to do, rather than gambling on how the market will play out.
Robert Nichols, Portico’s Managing Director, makes an important point, stating, “Right now we may experience some uncertainty, but as the negotiations progress, we will regain some much needed stability into the housing market, as people realise that the effects of Brexit are not catastrophic and go on with their lives. We’ll hopefully see transaction levels increase as a result, which are currently dangerously low and affecting price growth across the capital.
He continues, “Today’s events are likely to have a much more profound effect on foreign investment however, with the weakening pound expected to fuel demand from overseas buyers and investors.”
Many are also speculating that recent events will mean that the Bank of England will be hesitant to increase their interest rates, in spite of the recent inflation increase. This means it will remain cheaper than ever to borrow and get on to the property ladder.