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Post-Brexit positivity: why it’s still a great time to invest in the UK
July 28, 2016Article by Ray Withers
The apocalypse seems to have been averted and our post-Brexit referendum world looks remarkably similar to the way it did before the vote. Despite the surprise many felt at the outcome of the referendum, the stock market held up well and the pound’s drop in value meant that the property market received a boost from overseas investors, who essentially went sale shopping for prime properties in major cities. Some estate agents reported a rise in interest from overseas buyers of up to 50% since the Brexit vote and we certainly noticed a significant bump in enquiries at Property Frontiers.
One month on…
One month on from the Brexit decision and house sales are holding up well. The Hometrack UK Cities Index shows that the country held steady at a year on year growth rate of 10.2% in June, with sales outside London up 5% in the three months to July.
It is the North that is benefitting most from the new, post-Brexit era, according to the Hometrack report, with price appreciation notably higher there than in the South. Better affordability, along with rapid economic and population growth and record low mortgage rates have served to stimulate the market in northern cities and enabled the region to remain buoyant in the face of Brexit-related uncertainty.
A resilient market
The Bank of England has commented on the ‘resilient’ housing market in the wake of the Brexit decision, while former RICS residential chairman Jeremy Leaf commented that, “on the ground we have seen determination on behalf of people to negotiate hard and a new sense of realism emerge.” Thank Bank of England’s holding of interest rates at 0.5%, rather than lowering them, signals a cautiously confident approach to the current economic climate.
Essentially, the world has changed, but the UK – including its property sector – seems to have adopted a ‘business as usual’ approach. Figures from Halifax and Nationwide add to the positive picture. Halifax has reported that prices in the three months to June 2016 were 8.4% higher than for the same period in 2015, while Nationwide put growth at 5.1% in June, up from 4.6% in May. Meanwhile Pricewaterhouse Cooper has predicted that there will be no major house price crash as a result of the Brexit vote.
What lies ahead for the property market?
It’s still too early to assess the full impact that the UK’s leaving the EU will have on its property market, but this early positivity is certainly encouraging. Some are projecting that the Bank of England will reduce interest rates in August, but many of those are the same individuals who were convinced that the bank would do so in July. With so many unknown factors ahead, crystal ball-gazing has become something of a futile exercise. All we can do is judge the market on its actual performance and right now that performance is proving exceptionally positive.