Sourcing Property’s thoughts on Brexit
By Jo Eccles
They say that the 3Ds – death, divorce, and debt – fuel a lot of property market transactions. Our effective divorce from the EU will have a slightly different impact. Rather than lead to increased activity in the market, this will no doubt keep it subdued in the immediate future.
As with any big change, there lies uncertainty; the London property market has been in an uncertain state for months now and this will remain for the short term at least.
Buyer appetite in particular has been affected in recent months by the looming referendum – as well as of course recent stamp duty changes – due to its nature of longer term commitment. However, that’s not to say that the market has ground to a halt – or will grind to a halt – as a lot of property purchases in London are not discretionary. In the last few months, we have purchased properties for numerous clients whose lives were carrying on and they needed to move for schools, jobs, more space, and so on.
These buyers will not disappear, but we may see more and more would-be-buyers opting to rent in the short term to give them greater flexibility. This has certainly been a growing trend over previous months, especially at the very high end of the market; it’s to be expected, as this is fairly predictable behaviour. When the buying market slows down, the rental market usually picks up, and vice versa.
In terms of predicting what lies ahead for London property, it’s very difficult to do so as it’s so complex and relies on so many factors: costs of construction, availability of labour within the construction and property market, availability and cost of finance for developers, mortgage rates and availability for buyers, demand and supply in the re-sale market, and so on. However the exit details will be negotiated, property will remain an art of supply and demand and, what creates the balance between them, is pricing. Demand may fall from certain buyers, or tenants, and grow from others. For example, some buyers may prosper greatly from Brexit, depending on which currency they’re buying in, or their line of business.
On-the-ground insight will no doubt be even more sought after in terms of what’s happening with pricing, rental yields, and which areas and housing types seem to be more affected than others. Committing to a property over the coming months will require more advice than ever before.
If Sourcing Property can provide any advice then please don’t hesitate to get in touch.
If you have a question you’d like Jo to answer please email Jo.eccles@SPpropertygroup.com or tweet her @joeccles.