Why Brexit is not all doom and gloom for property investors

Whilst the UK property market will certainly face some short term volatility as a result of Brexit, over the long term property experts are still predicting that it will eventually settle down and remain an attractive investment proposition compared to other asset classes.

 

International investors may initially be reticent about investing in British property whilst the uncertainty exists but, if the pound continues to drop significantly, savvy international investors will swoop in to take advantage of lower property prices.

 

Edward Heaton, MD of property buying and search agent Heaton & Partners, said, “There will be international buyers who may initially give the London market a wide berth but this could be short lived if the pound drops dramatically, as London will suddenly look much better value to foreign buyers. There is a risk that with a period of uncertainty ahead of us, prices may drop off, but I believe that any fall will be limited and suggestions of a crash are overstated.”

 

Brexit doesn’t alter the supply and demand issue in the UK

 

Irrespective of the Brexit decision, the UK has a major housing supply issue which means that there is an ever growing list of people who are eager to rent. Investing in buy-to-let properties is therefore still a highly viable and attractive opportunity despite the fears that Brexit has created. People still need somewhere to live and if they can’t afford a mortgage, buy-to-let is where they will turn. Brexit hasn’t changed that simple fact.

 

Mark Posniak, MD of Dragonfly Property Finance, said, “Caution, reduced transaction levels and downward pressure on prices in the months ahead are almost certain but we should not write off the property market. Despite the magnitude of the result, the structural supply issue underpinning the UK's property market may well prevent prices falling materially. In addition, overseas demand may increase on the back of the decimated Pound. For many overseas investors, buying British property just got a lot cheaper.”

Demand for property will still remain despite Brexit

Many property experts believe there won’t be much of an impact due to supply not keeping up with demand in the housing market. Russell Quirk, CEO of emoov, said, “We don’t anticipate any tangible difference where the UK property market is concerned and the supply and demand balance that is currently dangerously out of kilter will see little sign of stabilising itself. Property values increased by 6% over the course of 2015 and we predict the same rate of growth by the end of 2016. Home ownership will remain far out of reach for the average UK citizen and the overwhelming swell of demand for property will remain despite our choice to leave the EU.”

Martin Walshe, head of residential at Cheffins, is also upbeat about the future. He said, “Both buyers and vendors waited to hear the referendum result, and now that we know we are leaving the EU, those who have sat on the fence will be returning to the market in their droves. Whilst we will probably experience a short period of adjustment, the UK property market is incredibly resilient and investment in housing will remain a cornerstone of our market, whether we are a part of Europe or not. Residential markets have always been influenced by uncertainty and we are now entering an economic climate which has never been experienced before, so the only strategy is be back to business as usual and brace ourselves for the busy period which is to come.”

Resilient Property Market

Janine Lewis, CEO of InvestSure, is of the same opinion. She said, “The decision by Britain to leave the EU won’t meaningfully change the fundamentals of supply and demand. Nor will it make a real difference to the nature of the challenges the property market faces, or the solutions that are needed. British property will continue to be an attractive destination for foreign money. But we also still face a severe housing crisis, with England alone needing a minimum of 260,000 new homes a year to cope with rising demand. The UK property market can either succeed or fail both within and without the EU, it won’t make a difference.”

Martin Robinson, director of sales at Hunters Property Group, continues with this sentiment. He said, “We expect some clients to pause to familiarise themselves with this news, but in the past we have found the UK property market has been very resilient against changes in legislation. At the end of the day, bricks and mortar will always be a good investment option in the UK.”

Diversify your portfolio

At Barrows and Forrester, we echo the points made above. Brexit has not changed the fundamentals of supply and demand and because of this, buy-to-let will continue to thrive in the UK.  We have already started to see a number of enquiries coming through from international investors eager to take advantage of the current opportunities. We are well- equipped to deal with both UK based and overseas investors so if you’re looking to diversify your property investment portfolio and want to see how far your pound will go, contact us now on 0333 3001 888 and speak to one of our experienced team of investment consultants.

28 June 2016
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