If you looked at the financial press today you would be forgiven for thinking that the world was coming to an end, the UK was out on a limb and destined to become the leper of Europe. The doom and gloom which is surrounding the property market in the UK has been overdone to say the least and much of the pressure on traded property funds has come from attention grabbing media headlines.
It is very easy to advise stripping the emotion out of any investment market, because in some ways you can trade on emotion, but the situation at the moment is extreme to say the least.
No change in the short term
As the UK authorities begin to come to terms with a future outside of the European Union (although almost certainly a future trading partner with Europe) let’s not forget it could take at least a couple of years to agree a deal which would see the UK exit the EU. There has been no change in fundamentals in the short term, stock markets have bounced back from recent lows and the lower pound will actually help exports and those looking to buy UK assets.
You could argue the Bank of England has also added to the confusion suggesting that additional liquidity has been put aside if required. Talk of reduced interest rates, with markets expecting an announcement next week, will have relatively little impact upon short-term sentiment which is being dominated by the negative reporting from much of the press.
Selective investment is the name of the game
The harsh reality for many critics is that leaving the European Union will allow the UK government to be the master of its own destiny. Already we have seen an array of countries around the world queueing up to arrange trade deals with the UK amid suggestions that dealing en bloc with the European Union was difficult to say the least. As a consequence, these future closer trade relations with individual countries will likely encourage more investment in the UK which will help the UK property market.
If you are selective, if you take emotion out of the decision-making process and you set your own boundaries and targets, there is every chance you could pick up some very interesting long-term investments. There are far too many property investors running for the exit when in reality not all of them truly understand what they are running from. The European Union is less than 10% of the worldwide trading market, the euro has not exactly been the most popular currency to date and further murmurs of discontent are emanating from other EU member states.
Keep it simple, keep calm and be ready to pounce
We will likely look back on this period in the life of the UK economy and wonder what we were scared of, why we failed to take the opportunities in front of us and why many chose to be spooked by the doom and gloom merchants in the media.