BREXIT and the Buy to Let Property Market

BREXIT Like it Or Not We Are Out

The nation has voted and the decision has been taken to leave the EU. Everyone has turned into a keyboard politician and there has been some unpleasant finger pointing and accusations already. Let us be honest and mature about this and the simple fact is whether you agree or not the result is in and we deal with any changes that there may be like we embrace change in life however challenging that might be.

The scaremongering and wild ‘predictions’ of doom and gloom are as always headline grabbing and have little or no validity or firm justification. Stand back and truly consider what leaving the EU will mean to the UK property market.

The simple facts are that rental demand is high, it will continue to grow as the age of the first time buyer grows and long term renters become commonplace. Demand will stay grow and supply needs to feed the demand. As we have said many times construction in the broad sense is the backbone of the economy and any government will do its utmost to maintain the stability of the property market. It’s purely Supply & Demand.

Will prices drop? We can only comment based from our own experience and knowledge of the property market. Personally speaking this is my twentieth year in property and in that time I’ve experienced high, lows but generally a steady growth.

First consider the levels of growth we have seen for the past few years. London has always experienced the excesses of the property market and broadly prices have increased as much as eighty per cent. The ‘ripple’ effect spreads outwards across the UK and dwindles as it expands, meaning that the rise in prices in London have lessened as it has spread out. The northern property market has broadly seen around a ten per cent increase in comparison. This trend/effect has never changed in the property market.

Can we see houses prices dropping and to what extent? If we consider the market analysts’ predictions and the property professionals experience the drop will probably be marginal and this is a drop on the market forecasted increase. The market was forecasted to grow so many of the drop in prices percentages sound more dramatic than they are likely to be. For example if prices dropped ten per cent from where they were forecasted to be the actual drop in real terms will be far less, maybe a five per cent drop in real terms over a three year period. Equate this to average houses prices in the north and in actual monetary terms this might mean a drop of around five thousand pounds over the next few years. This isn’t an actual drop in price from today’s value but a drop in forecasted growth.

Maybe you disagree? Time will tell.

Justification in delay? Market uncertainty unnerves many people but the smarter savvy investor looks at the bigger picture. If you were to perceive that the market will drop as yourself when and by how much. To judge the alleged bottom of a market is almost impossible and only really proven when you see prices starting to rise again. Wait until this point and you’ve not bought at the bottom of the market! It’s the supply and demand conversation again. Where else is producing such returns?

 When to buy? Why wait! Any price changes will be marginal and probably little more than a leveling of growth whilst the market changes to the EU departure. Interest rates are low, rental demand is high, housing shortage figures are continuously reported and the government backs construction.

What to buy? This advice has changed little for money years. Buy carefully, buy in growth areas, buy with discount and buy where rental demand is strong and will produce strong rental returns. Whilst freehold houses have wider appeal a good solid apartment at a great price in a growth area with a ‘friendly’ lease is naturally appealing.

What demonstrates much of this beautifully is today. Our first full day back after Friday’s leave result. Whilst some are expecting buy to let buyers to be more cautious and in extreme cases withdraw from their proposed purchases we have agreed three new sales. All of which are UK based buyers buying in the north of England. If this doesn’t demonstrate the belief in the ongoing strength in bricks and mortar nothing does!

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