The effect of Brexit on the UK property market is not a straightforward topic and there are many factors to consider. However, when it comes to London property in relation to Brexit, optimism is in short supply. Falling house prices, the weakening of the pound and a drop in property transactions seem to have affected the capital far more than other areas of the UK. Uncertainty around the London property market was brewing even before the Brexit vote. London property prices had been the highest in the country for several years, with record rents and a great number of properties selling for well over the million-pound mark. However, the market had been slowing down as the referendum got closer, with many properties selling for less than their asking price and fewer properties being put on the market.
The possibility of a no-deal Brexit has had a further negative affect on the London property market. Across London and the South East, property experts like surveyors, investors and estate agents have all witnessed a depression in the sales market. There has also been a dramatic decline in the number of properties put on the market, with many homeowners deciding to hold onto their property rather than selling in such an uncertain market. The London market sees a far higher number of overseas buyers than the rest of the UK, which mean that bad news about Brexit has taken an effect. Huge asking prices mean large investments and for risk-averse investors, it isn’t worth investing in London at this time. Transaction levels are down across London, with high-end luxury properties also experiencing a notable downturn.
UK property has long been regarded as one of the most stable asset classes in the world and the British property market has weathered bigger storms than Brexit. Though it took time, it definitely recovered from the global recession of 2008, before pulling through the housing market slumps experienced during 2009 and 2010. Many cities in the North of the UK have remained resilient despite the Brexit vote. On the whole, UK house prices are rising by around 3%, and in certain cities this growth is even higher, like Liverpool where house prices grew by 6.9% in 12 months. Property investment firms like RW Invest have noticed a real change in demand, with investors turning away from London and choosing to invest in property in the North of the UK.
Research conducted in 2018 found that 77% of UK-based property investors believed that Brexit will not affect their long-term investment strategy. It was also found that 53% of those surveyed would still rather invest in a traditional asset class like property instead of a newer, potentially less stable asset class like cryptocurrencies. The study also revealed that 18% of investors, which works out at 1.23 million people in the UK, will consider investing in the next 12 months in a property. As well as this, over three-fifths of property investors regard UK property as a safe and secure asset class in the current market. This report on investors and their views about the property market is relatively positive, showing that buy-to-let investment is still a viable alternative. For many buy-to-let investors, Brexit uncertainty has shifted their focus from the instability in London to the more lucrative North which continues to be less affected.
Source: Shout Out UK