If we cast our minds back six months there was doom and gloom surrounding the UK property market after the Brexit vote. There is no doubt it was an astounding vote by the UK public and one which had been discounted as impossible by many so-called experts. The press was full of negative comment, there was talk of a house price collapse, but where are the Brexit sellers today?
In light of the Brexit vote it became apparent that some sellers were looking to offload their property as quickly as possible at a discounted price. There were suggestions that the UK economy would stall, unemployment would rise and the UK property market would run out of steam and fall off the edge of a cliff. If you truly believed that scenario then it would make sense to sell your property assets as quickly as possible, regroup and wait on the sidelines. However, as we now know, the UK property market has not collapsed, the economy continues to grow and unemployment is at record lows.
Creeping back into the UK property market
It is difficult to say with any certainty how many investors disposed of their property assets in light of the surprising Brexit vote. What we can say is that immediately after the vote, demand reduced and the supply of property increased. So-called “savvy” investors were apparently waiting on the sidelines to pick up bargains as the market began to slide. So, six months after the Brexit vote where does the UK property market stand?
Recent figures show a significant year-on-year rise in UK property prices (around 6.7% for the average UK property) with growing demand and stagnant supply. Is this a sign that the Brexit sellers are returning to the marketplace?
Panic buying follows panic selling
Like an investor who has sold their shares too quickly many UK property investors will now be desperate to get back into the market. Whether we will see panic buying from those who were coerced into a “panic sale” remains to be seen but there are indications that buyers are returning in decent numbers. Even a straightforward confirmation of the UK government’s Brexit negotiating strategy yesterday helped to stimulate a partial recovery on the currency exchange markets. There are signs, albeit early signs, that perhaps investors are now looking beyond Brexit and the many future opportunities for the UK?
One important element of Brexit which has been clarified by the UK government is the future immigration policy. There were concerns that immigration would crash as the UK left the European Union leading to reduced demand for property and issues in the employment market. These seem to have been red herrings because immigration will not rapidly reduce overnight but will be more control by the UK government. As a consequence, there will still be growing demand for UK property which should play into the hands of long-term buy to let investors.
Slowly there are signs that Brexit sellers are now dipping a toe back into the UK property market. Even though Article 50 has yet to be triggered there is been much speculation about the trading arrangements for the UK in the future. The simple fact is that because nobody knows with any real certainty how the situation will pan out, worst-case scenarios and rumours very often grab the headlines as fact. So, even though the UK property market will experience headwinds in the short to medium term there still seems to be a very strong backbone of demand from investors.