In fact there are some tangibly positive things that are occurring, despite the doom mongering and negativity there is currently in financial and political UK landscape. The uncertainty of the state of Brexit negotiations has had something of a cooling effect on the property market, but the extent is the telling factor in the equation.
Former UK Chancellor George Osbourne, who was famously pro-remain himself, forecast something of a housing market crash in the lead up to the vote in June 2016, stating that a drop of somewhere between 10-18% was possible if a ‘Leave’ vote was the outcome of the referendum. Two years have passed since the UK population spoke and an exit from the EU was decided upon and the purported sharp adjustment in housing prices just hasn’t materialised.
In fact, what has actually come to pass is, in truth, is more of a slowing of the average annual increase in property prices in the UK over the last 24 months. Pre Brexit, the market was on average, increasing by around 8% per year across the country and what we are seeing now is a growth nearer the 5% mark, according to an official report by the Office of National Statistics. London is the only exception from this rule, as prices have dipped slightly, but only to the extent of 1-2%.
Why the Slowdown?
Rather than being a completely negative sign, the slowdown is more of an indication that those who own property, particularly in London, are choosing to sit and wait to see what the final version of leaving the European Union really looks like. An unexpected by product of this period of limbo in the UK is that foreign investment is being attracted to buying property here, as the feeling is that there will be a surge in prices, once Brexit is implemented.
Also, investors from China, Hong Kong and even the Middle East have enjoyed a favourable exchange rate with the relative weakness of the Pound for some time now, which is further adding fuel to the fire. Sterling has since recovered some of the lost ground, but was as low as $1.21 against the US Dollar at its lowest point after the referendum.
Reflected in Business Activity
If any more proof were needed that the negative side of a departure from the EU has been hugely overplayed, it can be seen mirrored almost exactly in the fact that the majority of major international business and trade with the UK has hardly changed in the last two years. There have been some notable exceptions to this trend, with the likes of Barclays, Lloyds and Goldman Sachs choosing to relocate some of its operations to Europe from the UK, but the overall trend is a very stable one that doesn’t seem to be hugely affected by the uncertainty.
Employment is another sector in which there has been no indication of a downturn due to Brexit anxiety. Quite the contrary in fact, as employment in the UK is expected to rise into 2019, with around 130,000 new jobs being created last year in London alone. Business in the capital and the wider UK is in rude health and firing well, meaning the doomsday scenario where the UK is no longer a world trade powerhouse, seems to be well wide of the mark. Tech companies, banks and financial institutions are amongst the sectors that are continuing to recruit for the future in the British Isles.
All things considered, things seem quite a bit more positive in general than has been the underlying narrative since the Brexit vote. The evidence is compelling that considering investing in property could be a shrewd move and one that could net you a significant yield in the long term, particularly as all the signs point toward a strong UK in the next 5 years, regardless of the outcome of Britain’s exit from the EU.
A Good Time to Invest in Property
So, there really is potential for investors in the UK housing market, even though there is a degree of uncertainty in the UK in general. This will unfortunately and mostly likely remain the case until Britain extricates itself from the Union and its just a case of understanding that the modest gains of the last 12 months in the property market are temporary and by the 29th of March 2019, we’ll know what an independent UK looks like and things will undoubtedly improve.
Stay with it people, it will get better….probably.