While COVID-19 has pushed the painfully protracted Brexit negotiations into the background of the world stage, there is still plenty of work being done behind the scenes. There are a number of trade deals yet to be agreed and plenty of red tape to be untangled between the UK and other key countries. But against this uncertain series of events, UK property remains one of those commodities that seems largely unaffected by external challenges, making it a prime opportunity for anyone open to invest into a solid bricks and mortar opportunity.
Brexit: A Property Market in Perspective
Just 13% of brokers consider that Brexit will have an impact on house prices and while some others have expressed concerns about the market stagnating towards the end of 2021, we need to put this into perspective. The market is currently performing exceptionally well therefore any perceived “stagnation” would actually be a sign of activity returning to a steadier rate as opposed to more significant market dips.
In order to gain an accurate picture of the post-Brexit property market, we can look at current activity as well as activity since the EU referendum. Regional cities in particular have proven exceptionally resilient, perhaps due to their less-vulnerable position and reduced exposure to EU trade. We still cannot be sure of the exact nature of our exit from the EU – a no-deal Brexit, for example, would have a harsher impact on property prices than a less dramatic deal. We also need to consider that current property market data is slightly less informative than usual after the Land Registry paused their house price reports during the first lockdown.
Steady Growth
What we do know is that the market has enjoyed steady price growth post-lockdown and buyers remain exceptionally confident with a steady stream of those taking full advantage of low mortgage rates. Those rates remain competitive which will further boost both borrow affordability and market confidence. The wait and see attitude adopted earlier in the year seems to have been firmly cast aside by those seeking to find their dream home right now rather than wait around and see what else the next year or two has in store.
Housing expert Kate Faulkner explained that: “People have decided that putting a roof over their head is more important than the price they pay for it” as lockdown has caused many of us to reassess what truly matters and prioritising our dream home.
She goes on to explain that the market is witnessing a, “continued change of attitude to property, with people keener to buy when it’s right for them, rather than when the market suggests it’s a good or bad time to buy”. It is this attitude that looks set to bolster the market in both the short- and long-term with Brexit set to be just a passing drop in a powerful property ocean.
Stamp Duty Holiday
While we might reasonably expect to see a small drop in house prices once Brexit has been executed, it seems more likely that prices will remain relatively stable as we need to consider other events that are increasing the appeal and strength of the UK market regardless. We previously discussed how demand has increased in regional cities as buyers seek more space and a calmer pace of life.
This demand has been fuelled further by the stamp duty cuts. With the Stamp Duty Holiday continuing to run until the end of March 2021, the market is welcoming record transaction levels to stimulate a healthy level of activity that looks set to continue long after Brexit.
There will also be those investors who are savvy enough to look at the UK property market with a long eye and see that a rise and fall in property values is par for the course but the fundamentals of the market remain exceptionally strong. This is why we continue to attract such a high level of local and overseas investment from those who understand the intrinsic benefits of a long-term strategy.
There are also specific elements of Brexit that make this a prime time for investors. Those who are looking to upsize will benefit from investing during the downturn as “the more valuable the home sees a bigger price drop in relative cash terms.” When we consider the additional stamp duty relief thanks to the holiday, this puts many buyers and investors in a stronger position during this period.
A Globally Renowned Market
With a large proportion of overseas investment interest in the UK coming from further afield than wider Europe including the US and Asia, this further suggests that Brexit will be of little consequence to the UK property market. Not only are these investors fully aware that Brexit will take place and continuing to pursue their investment interests regardless, but their transactions are also likely to be little affected by the events of our EU departure ensuring that they stay on track during and after our departure.
Some reports suggest that landlords may struggle to find tenants if the terms of Brexit restrict freedom of movement for EU nationals but there still remains a solid level of demand for high quality accommodation both from UK nationals and the international market such as students coming to the UK to study in its world-renowned higher education institutions.
The new-build market has come back extremely strongly since lockdown and the replacement Help to Buy scheme is also a positive development in line with a commitment by the Government to increase housing supply. This all supports investor ambitions and strengthens the property market further by encouraging a higher volume of transactions and responding to increased expectations from tenants on the quality of their accommodation, which is especially important in the light of the pandemic.
If the government continue to prioritise housing in their post-Brexit agenda, then we can confidently predict that the positive market movement will continue long after the stamp duty holiday deadline has passed and Brexit is over. For detailed information on the best property investment opportunities on the market, contact our team at Alesco today.
