There was a lot of scaremongering before the EU referendum about how the UK’s property market would instantly collapse in the event of a ‘leave’ vote, but industry professionals are actually relatively calm about the situation, now that the UK has indeed decided to part ways with the EU. In fact, many property companies are highlighting the value of making an investment in the buy-to-let property sector right now.
Stuart Johnson, Business Development Manager at Prime Centrum, observes,
“There was always going to be some uncertainty as a result of a Brexit vote, but the basic principles of supply and demand in the UK’s property market didn’t suddenly change the moment the ballots tipped in favour of the leave campaign. We don’t have enough houses in the UK. We didn’t have enough before the referendum and we still don’t have enough now. Demand is still strong and the private rented sector is growing. Demand for high quality rental accommodation in the centre of cities like Liverpool has never been so encouraging.”
For investors from overseas, there is the added bonus of the current exchange rate meaning their dollars or euros suddenly stretch further when they are buying in pounds. As at 5 July 2016, those buying in dollars could enjoy the best exchange rate for 31 years, making now the ideal time to pick up a UK property.
While Brexit does bring with it a whole host of uncertainties, work is already underway to address these. Geoff White, policy manager, North and Midlands, for the Royal Institution of Chartered Surveyors (RICS), has flagged up lack of access to skilled workers from overseas as a potential issue for the construction sector, commenting that,
“Uncertainty over the renegotiation and the North West’s future relationship with the EU must be minimised by laying out a clear timeline and set of ambitions.”
Such attention to detail at this early stage in the Brexit process will serve the region well when it comes to the long-term future of its property sector. The industry will also benefit from the fact that interest rates are likely to remain low while the Bank of England focuses its energies on maintaining stability. This is good news for those with existing mortgages, as well as investors seeking to take out buy-to-let mortgages currently.
With the UK’s medium and long-term prospects looking strong in terms of property, even a few short-term market fluctuations are unlikely to bother savvy investors. During the financial crisis, UK property was notable for its superior performance to shares and many investors have learned from that experience.
Regional city demand looks set to remain strong, with urban areas like Liverpool looking forward to continued growth. Properties such as Parliament Residence in Liverpool still boast excellent investment credentials, such as a low entry point (£109,900) and decent yields (7% NET income p.a. assured for the first three years), while rental demand from the growing population of young professionals seeking a city centre lifestyle remains strong.
All in all, despite the surprise ‘leave’ decision from the UK’s voters, the timing is perfect for investing in UK property, for both domestic buyers and those from overseas.
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