They say 24 hours is a long time in politics well just a few days is a long time the UK property market. This is how long it has taken surveyors in the UK property market to finally admit that concerns about Brexit were overdone and indeed the UK property market has yet to take a real hit. It also seems as though confidence is returning to the UK market after the “wobble” caused by the surprise Brexit vote – so what can we expect in the short to medium term?
Property market activity
It would be wrong to suggest there has not been something of a wobble in the short term because of concerns about the UK leaving the European Union. It was more to do with the “unknown” of the situation rather than the reality but we are starting to see a definite pickup in activity. Indeed some of the initial slowdown in the market can also be blamed on an increase in property taxes and the general state of the UK economy. It was not wholly a Brexit orientated slowdown but perhaps the coming together of various situations.
Feedback from surveyors in the UK has been extremely positive regarding expectations of increased activity in the UK property market. A balance of +13% of those surveyed expect sales to increase over the next year which compares extremely favourably to the -12% figure of June. How quickly trends and opinions can change!
UK property prices
Aside from the London property market, which is very susceptible to short-term sentiment changes, there has been no fall in UK property prices. Indeed it seems as though the net balance of surveyors across the UK are still expecting property prices to increase over the next year. This is a particularly strong turnaround when you bear in mind that in June a survey suggested that surveyors were neutral on UK property price rises and this has risen to a +23% in July. Even though this is down from the +66% figure of six months ago it is still a significant turnaround since the Brexit vote.
While many property investors will be swayed by the doom and gloom headlines of the mass media it is worth taking into account the views of those who actually participate in the property market and have a “feel” for what is going on. The consensus opinion at the moment is that UK property prices will increase by 3% a year for the next five years with the London market expected to do slightly better at 4% a year. This would seem to rubberstamp suspicions of a returning confidence to the UK market?
London property market
London seems to be a more sensitive property market especially to the aspirations and activities of overseas investors. As a consequence, movements in London property prices can be sharper and more severe which is exactly what we have seen since the Brexit vote. However, history shows us that you never write off the London property market which has time and time again bounced back from the “abyss”.
Talk of the international financial sector deserting the UK to become more European orientated is another argument which has been floated time and time again with no success. The UK financial sector goes back centuries and you have to ask yourself, if the likes of the US and the Chinese financial sectors can operate independently, why not the UK?