Brexit vs Properties
Although no one knows what will happen after Brexit, a number of people have turned to fear-mongering tactics in order to sell products and service to make money. They’ll tell you that unless you trust them and use their services you’ll be poor or you’ll end up on the streets. It can be a hard thing to differentiate between the facts and the marketing techniques. I’d like to explain what I think the outcome will be and how it could affect you. After a lot of research, I found a few interesting points.
2016 - A Recap
Brexit was announced in 2016 with dramatic effect. The British Pound took a hit and lost a little value, a new Prime Minister and the Bank cut rates.
In a little more detail; on the 23rd of June the public raced to the polling stations to make an all-important vote and decide if they want to play it safe or venture into the unknown. To many people’s surprise, they woke the next morning to find that 51.9% of the British population had won the vote with the decision to leave. A nation divided; Britain fell into dismay as everyone argued with one another. Even the (then) Prime Minister; David Cameron had almost nothing to say as he announced his resignation, leaving us without a leader. And as if that wasn't enough, the Pound lost value falling to a 30 year low.
A few weeks later the UK got a new Prime Minister which sparked, once again, more controversy. With all of this, the Bank Of England makes a decision to cut rates for the first time in around seven years. And then David Cameron decided to quit politics altogether. With a lot more happening after this it would seem that there has been a non-stop string of bad breaks for Britain and her people. A constant theme of upset, drama and dismay would make anyone feel that they're in for a bumpy ride.
The Future of The UK
As mentioned before; it is a hard thing to forecast what will happen to the UK after Brexit is finished, we could blossom and become a very successful country. Or we could fall into poverty and regret the whole thing.
Either way, at 11 pm on the 29th of March, the UK will have officially left the European Union (EU). I’d suggest that it’s unlikely the markets will have a sudden crash as long the Prime Minister manages to achieve a deal with the EU. After those initial few days, there should be some real change starting to happen. The EU will be drafting new laws and legislations that don't apply to Britain and this is likely to create a distinct difference between us and them. For example, the Manufacturing industry will probably to be the first to be affected. There will be a number of factories that may have moved to the continent and in addition to this producers could have shut down and disbanded altogether. The increase in costs will be a big strain on businesses in the import/export industry too. If a no-deal Brexit does occur there could be costs that add up to £4.5 billion in EU tariffs which is going to cripple the manufacturing industry as they try to decide whether they follow the UK specifications or conform to the EU standards.
This leads us on to what effect will there be on the housing market. Due to there being a supply chain builders won't be able to get the materials that are required to construct a home or block of flats.
The housing market has been noticeably grinding to a halt as there is still uncertainty regarding the effect the Brexit deal (or no deal) will have on the price of housing. Prices in and around London have fallen 0.4% from January up until May. While there has been small growth in the East of England. In the South East, sales have plummeted. With this in mind, the British public has been trying to keep a close eye on house prices. Both homeowners and even those who can’t afford to buy have been fixated on what will happen next. You are probably one of those people reading this blog article. And the reason for the obsessions over house prices at this time? The answer is; Brexit - and the questions that surround it. What is Brexit going to do to house prices? And; how will the EU/UK negotiations affect the house prices?
Looking at how Brexit has affected house prices so far we can suggest that it all hangs on the negotiations and whether or not we get a ‘hard’ or ‘soft’ Brexit deal. As of now, it would appear the growth of house prices has slowed after the 2016 vote to leave the EU. However, there have been discrepancies between regions. Regardless the average house price had only grown 3% this year before May as opposed to a huge 8% the year before the referendum.
The biggest question on everyone's lips is; How, if at all can I make money from a property after Brexit? - Good question. The foreseeable answer would be… longevity. It would appear that both Brexiteers and remainers have a common opinion, the prices may fall a little right now but in the coming months after Brexit; they will be on the rise, growing constantly. This is especially true for big cities like London. House prices always rise for places like this simply due to the attention that they get. The number of people that have moved there for work, in fact; during 2017 London reached an all-time high of 8.8 million people living there, which goes to show that there is high demand. Arguably this means that the short-term drop in the market will allow for a reasonable price point on properties offering a great return in the coming years - this just takes a level-headed individual that is willing to make sure they don't panic and stick to their guns.
Finding the right property in the right city, for a good price is a tricky endeavour. But with the drop in price, it should become easier for everyone, even opening up opportunities to those who otherwise wouldn't be able to afford to invest. What's more; using the right tools will make a big difference. Finding the right property management company will have an indefinite impact. It will mean that you can get on with other duties or tasks without having to worry about the kind of tenant you have or maintaining the property.
This guest post was written by William Scott-Moncrieff of Ogilvy & Sneyd - property management specialists and estate agency.