Brexit Won’t Affect the Property Market as Badly as You’ve Been Told

The property market after Brexit won’t be all doom and gloom. The historic and unprecedented vote saw a majority of the British electorate decide to leave the European Union. With the ‘Leave’ camp pulling 52% of the vote, Britain has sailed into uncharted waters as the first nation to enact proceedings to leave the Union since the signing of the Maastricht Treaty in 1992. Since the referendum, there has been much in the way of claim and counter-claim regarding the outlook for Britain’s economy and industries. There was an understandable concern for property prices after Brexit.

The British pound was hit hard in the immediate aftermath, sinking 10% against the US dollar to its lowest point for 30 years. The pound also fared poorly against the euro and the Japanese yen. Consequently, as several businesses and market leaders made ominous noises regarding their potential flight from British shores, it seemed an irreversible decline was in motion.

It isn’t Doom and Gloom

Bricks and mortar have long been Britain’s most stable and favourite asset class. More reliable than the peaks and troughs of the stock market, property investment has long represented a safe, secure and profitable venture for investors. July 2016 found a number of real estate funds with joint assets of £18bn freeze withdrawals. The measure stopped a housing market crash as a potential spate of mortgage redemptions and panic sales loomed.

However, property prices after Brexit have fluctuated at various points. The effect has been felt most keenly in London, where property prices after Brexit have slumped, and sellers cannot find buyers who tend to be too wary to make investments. It’s too easy to blame London’s travails on Brexit. It has become the ‘go-to’ excuse for financial institutions and property firms who post profit warnings and bemoan their own bad luck. London is beset by more problems that have built up over the long term than solely by the referendum result.

London is full of people leaving their homes. The number of people leaving the capital to seek their fortunes elsewhere has reached its highest ever level. From June 2016 to 2017, a total of 330,000 people upped sticks and headed to other cities, towns and rural areas away from London.

The average London rent has climbed above £2,000 per month for the first time, sparking a mass exodus of graduates and professionals in their 30s. By way of comparison, the average monthly rent outside of London is £796. The general cost of living is also an incredible burden, even for those on generous salaries.

Blaming London’s property prices after Brexit on the referendum is simply obfuscation. Trends across the rest of the country indicate that post-referendum, the property market after Brexit is not something to be feared.

If there’s anything we know about the private sector, particularly the property market, it’s that it marches on relentlessly. The unstable pound has contrived to aid the property market after Brexit, as overseas investors have made an ever-increasing number of overtures and investments in British property.

The biggest run came from Asia, with the year from 2016 to 2017 seeing an 11% increase in Asian investment in the UK property market after Brexit. Asian investors now account for a total of 28% of all property investments in Britain.

The student property market after Brexit has fared incredibly well. The typically high yielding market is attractive to overseas investors in the wake of the Brexit referendum.

Money from Singapore poured into the student property market in the latter half of 2016. Trade from the Far East nation leapt from £1.9bn in the first two quarters to £2.1bn. It keeps with the trend of Far East investors seeing PBSAs as an asset class with unbeatable value and high returns. Brexit has done little to dampen the market. Quite the opposite.

In the same year the overall investment volume in student property rose to £4.5bn; an increase of 23% on 2015. The following year saw an even bigger rise still. Investment in student properties and developments in the UK hit £5.6bn. The demand for high end luxury student property shows no sign of abating. Overseas investors almost doubled their market share in UK student property from 35% to 64% from 2016 into 2017.

Stability Of The Student Property Market After Brexit

Student property is a worthwhile investment with major long-term potential, even in the face of such unprecedented political uncertainty. The referendum vote did nothing to quell rising student numbers or applications. In 2016 applications from UK and EU students to UK universities rose by 7.5%.

In the wake of the referendum, the government confirmed that students coming to the UK from any country in the European Union would be eligible for student loans. Nor would any funding be withdrawn. With some clarity afforded by the government on this issue, it means student numbers and applications for places can continue their steady rise. Consequently, the student property market after Brexit is in robust health and based on projections, can only become more secure and profitable.

The property market after Brexit has not succumbed to uncertainty and fear-mongering. The Office for National Statistics (ONS) stated that the final quarter of 2017 saw a rise of 4% in the UK’s commercial and residential property sectors. It isn’t luck or pig-headedness that is driving these figures; it’s the notion that British bricks and mortar is still the best asset class to invest in.

Research conducted in 2018 noted that nearly 80% of property investors believe that Brexit will not affect their long-term strategy, and nor has the referendum result, or the uncertainty that trailed in its wake had any notable impact on how they have conducted business since June 2016. With property prices after Brexit not tumbling as far as some had predicted, the market’s stability is of great reassurance to investors.

Brexit is an inevitability. Regardless of political upheaval and social consternation reported endlessly by the media, the result of the June 2016 referendum cannot and will not change. Investors are more concerned with trade disputes between China and the USA, the growing influence of Russia and the ebbs and flows of politics on the Korean peninsula than the frivolous arguments taking place in the House of Commons.

The stability of the property market after Brexit isn’t just in its financial results but in its overall outlook. The property market after Brexit remains as fortified as the foundations the property itself is built upon. Intriguingly, 58% of investors surveyed have less confidence in the strength, purpose and function of the government since the referendum. Much like the robustness of the UK’s property prices after Brexit, some things just don’t change.