The UK property market has so far managed to remain relatively stable despite the doom and gloom peddled by EU supporters. The last few hours have seen a significant uplift in the short to medium term outlook for the UK with a new prime minister and an indication that UK base rates will fall in August. There were suggestions that UK base rates would fall today but these have been scuppered by the Bank of England which announced a “no change” policy. So, what do these positive developments mean for the UK property market?
Risk reward ratio
There are various risks to take into account when looking at any investment, let alone property, and while traditionally UK base rates and political stability are not necessarily top of the list, they have been of late. The fact that we have a new prime minister in place and UK base rates will fall in August, thereby reducing the cost of borrowing, addresses two of the recent risk factors which had been in the minds of investors. Whether this will immediately be reflected in the price of property in the UK remains to be seen but these are certainly two very positive developments over the last 24-hours.
Demand for UK property
There seems to be a general opinion that UK property prices are falling but if you look at the stats you will see that there has been a significant reduction in the number of properties for sale. There could obviously be a number of reasons why the number of properties for sale has reduced but this is not exactly the panic selling which some experts had predicted. Again, as we have mentioned on numerous occasions, the UK property market will receive some support from overseas investors when you bear in mind the recent reduction in the value of the pound. True, it has bounced over the last few hours ahead of an expected UK base rate cut which never arrived but it is still significantly down on trading levels just prior to the Brexit result.
In many ways it is ironic that those writing the doom and gloom articles about the UK property market are those who are not active traders in the UK market. We see this in various walks of life, so-called experts commenting upon markets in which they have knowledge but not necessarily trading experience on the ground. Very often what starts as a personal opinion can become “fact” in the mind of sceptics which is pretty much what we have seen since the EU referendum vote. It is easy to forget that the UK property market has been extremely strong over recent years, significantly outperformed many of its European and worldwide counterparts and perhaps any slowdown may in fact be a welcome deflating of some of the more buoyant regional markets. This will allow investors to sit back, re-evaluate the situation with a long term time horizon and take advantage of emerging opportunities.