Brexit Impact on the Sale and Rental Market in UK
Upon Brexit, many undone deals that were in London property market were abruptly canceled and left agents scrambling for new buyers. The panic was exacerbated by the pound plunging lower than it had it in years, and had buyers and sellers alike taking a step back to take in what happened and what possible effect it could have on London housing and rentals market.
The London Property Market Post-Brexit
The expected drop did happen, but a big part of that was due to the “fear Brexit campaign”, as well as wise investors adopting a wait and see attitude. Housing prices in London today are about 20% lower than they were at this time last year, with the market expected to drop another 5.6% over 2017.
Although Brexit does play a factor, in reality, markets have slowed in London as of late, simply because of the exorbitant prices. Sales were a bit sluggish because fewer people could afford the high prices, and with recent tax changes that were in effect if you purchased after April, this meant buyers were completing purchases before the referendum, which would create a softer market. The impact of Brexit has been felt the most in the London luxury market. With some sellers reluctant to sell, as well as more interest from foreign buyers as they stand to get the equivalent of 20 percent discount with the euro being very strong, and the pound still at an all time low. Prices are being cut in order to sell if the owner of the house no longer wants
Is it a Good Time to Sell/Buy Property in London?
Buying property in a global city such as London is never a bad idea. More often than not it is a seller’s market as the demand far exceeds the supply in London. Despite several promises and expectations, there is still not enough housing in London, so your investment in property in the capital is well worth it, no matter what the financial climate is at the time of purchase. That bit of advice should be taken with a bit of caution as well, because this market is not good for buyers to flip a property and gain anything from it. With the market so soft, a flip at this time is more than likely to result in a loss. Most advise waiting until after the terms of Article 50 are negotiated and then see what the numbers say.
For landlords looking for property to buy and/or rent, this is a fortuitous time, as they stand to profit more from having tenants, especially with the new taxes. With the continued housing shortage, there are still plenty of people looking for property to rent and this includes those who were thinking to buy, but are now a bit hesitant until the market settles down, and/or the conditions of the UK’s exit are known.
The bottom line is the London luxury sales are a bit slow, but for those buyers who have been saving, interest rates are lower, for the average properties, and they stand a better chance of getting the mortgage they seek at a lower price. For those that are renting, that market is likely to continue to be saturated, as Brexit has had no effect on the number of units available. Rents may increase, but they are likely to do so at a slower pace. Brexit resulted in an environment of uncertainty in the UK property sale and rental Market, but as time passes, numbers are settling and Brits are simply waiting.