Over the last few days we have seen a significant swing back from Brexit towards the Remain campaign as the reality of leaving the European Union begins to hit home. Many experienced pollsters have been expecting this swing back to the Remain campaign and while the result is still too close to call the next few days will be extremely important.
If you take a step back and look at the situation from a distance, will the UK electorate regret not leaving the European Union if the Remain campaign is successful? Whatever happens there is no doubt that the referendum has placed uncomfortable focus on the European Union and the fact that an unelected body is able to literally control governments within Europe.
You can look at all of the polls you like, chat to people on the streets but the financial markets are where it is all happening. Even though property investors have been sitting on the sidelines for some time now, awaiting the outcome of this referendum, a recovery in sterling just last week indicates what the markets think. Many believe that the Remain campaign, no matter how disjointed and dysfunctional, will be successful on Thursday 23rd of June with many in the UK unwilling to take a leap into the darkness.
It will therefore be very interesting to see how UK property markets react in the short to medium term as the UK likely comes to terms with a long-term position within the European Union. We have already seen attacks on the London financial markets, from the EU, with the likes of Germany very keen to take over some of the services deeply entrenched in London. Will the EU look to undermine London’s presence in the financial markets yet further going forward?
In many ways the UK, having voted not to take on the euro and often at odds with many European partners, has never really played an integral part in the Eurozone. Supporters will argue that this stance has proved extremely successful, with UK economy outperforming its European counterparts, but it does leave the country in “no man’s land”.
It is no surprise to see that foreign investors have been looking towards UK property for some time. This is a market which has been extremely liquid with many areas of the UK much sought after by both domestic and foreign investors. We can only hope that a vote to remain in the European Union does not drag the UK economy down with its European counterparts. If you follow the financial press you will be well aware that the likes of Greece are still in extremely dire straits, Spain is struggling, Portugal is not performing as expected and the French economy has seen a disappointing slowdown of late. So how will this affect the UK?
Whatever the result on Thursday there will be a passionate debate about whether the UK economy would perform better outside of the European Union or within. Talk of trade barriers and trade tariffs seem to be well short of the mark bearing in mind that the European Union supplies more products and services to the UK than the UK does to its European counterparts. The UK property market requires a strong underlying economy to prosper especially when you bear in mind that some valuations across the UK real estate market are being stretched.
Whatever the result on Thursday there will be some uncertainty but we only need to look at the recent Scottish independence referendum to see that property markets do eventually find their level.