Just as the entire population of the UK have just about had enough of hearing about Brexit every second of every day, we thought you could do with one more worthy read to clarify the effect of Brexit on the property market. There is a lot of dissension surrounding Brexit lately, and you will have seen many alarming headlines from almost all major media outlets, but with that aside what state is the property market currently in and what lies ahead?
To Fear Or Not To Fear – The Brexit Effect
Despite what the newspaper headlines, radio shows, and the news channels have been saying since the 23rd of June 2016 when the British public voted to leave the European Union, Brexit hasn’t been all bad for industries so far. There is no doubt that stability has been pretty absent among many sectors throughout the country but there have also been market strengths. When taking into consideration the fact that not one single person knows for certain what will happen when Brexit does come into effect, aren’t fluctuations expected? The UK economy has shown its resilience on several occasions since the very close referendum vote but is often overlooked because of the poor performance of the pound. Having said that the dipping of the pound isn’t to say that we are doomed and will never recover. It’s certainly not ideal for those within the UK to purchase services and goods in euros or dollars, but the drop in the pound is appealing for overseas investors which would only result in a benefit. Its safe to say that the UK has a lot of eyes watching it at the moment.
The Property Market Post Referendum
Now to take a closer look into the property market and how it has dealt with all the Brexit drama. Assumptions were made immediately after it was announced that the country had voted to leave that the property market would crash and it would be a complete disaster for everyone. Yet that didn’t happen. In fact, a slight growth was seen in parts of the country particularly in London and the South East. Prior to the referendum property prices were steadily increasing, and after the vote, they continued to do so for several months. There was, however, a decline in prices in June 2016 where Halifax recorded an average £3,000 drop that lasted for two months. In August 2016 property prices began rising once again. Up until March 2017, there was little price movement in the property market other than some minor rises however since then property prices are increasing at a much faster rate.
Does That Apply To The Whole Of The UK?
After maintaining a level of stability for a few months, UK house prices shot up by 3.6% throughout this year that is all except for three cities. Prices in London fell by 0.3% while Cambridge dropped by 0.1%. The worst to be hit was Aberdeen with a 3.7% decrease. Those percentage falls weren’t persistent though because from June 2018 to August 2018 house prices in all three cities rose once again. London climbed by 0.8% which is more than double of what it fell by, and prices in Cambridge soared by 1.0% coming out stronger. Aberdeen also witnessed increases by 0.2%. As for the rest of the country, the housing market has remained strong. Price growth in Newcastle has stood at 3.3% during the same period, and Birmingham increased by 6.6%. Liverpool and Manchester experienced the highest escalation with Manchester rising by 6.8% and Liverpool by a whopping 7.5%.
The topic of Brexit is mostly doom and gloom and for those who aren’t knowledgeable enough on the situation, investing is a somewhat risky thought at present. Again, this mostly comes down to the near constant negativity surrounding Brexit and of course, the uncertainty of what will unfold, deal-wise, in the future. Since the Brexit vote, the UK foreign direct investment has increased every quarter with the exclusion of 2018’s first quarter. London sat proudly in first place out of the top 10 global foreign direct investment spots for 2017, and the Manchester-Liverpool area was awarded 10th place. 68 FDI projects were acquired by the Manchester-Liverpool area last year which was more than both Toronto and Barcelona. The second quarter of 2018 saw a rise of £22,199 million for FDI, the highest its been since the end of 2016. As far as yields are concerned, the UK’s regional cities don’t appear to be declining. There are many great investment opportunities out there with several cities offering attractive yields.
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Whatever your views and opinions about Brexit and the current impact it has had the property market have remained strong. The aftermath of Brexit is still unknown however with the regeneration projects and regional growth continuing across the country the future is looking very bright in regards to property, technology, and innovation.