One of the key questions for the UK, now it has voted to leave the European Union, is what will happen to property prices? Setting emotions aside, as property investors we should instead be asking, is this a good time for investing? Should we all submit to fear and panic? Let’s have a look at the facts:
A weaker sterling may result in stronger interest from foreign investors
The recent fall of 11% on sterling has caused a reasonable stir among foreign property investors. Buy low, sell high is a golden rule of any investment - an appreciation of the prospects and the overall stability of the UK real estate market has traditionally attracted foreign investment. Now, renewed interest in Post-Brexit prices could result in an upward property price trend, which may be a call for action for domestic investors. Brexit, though unprecedented, opens new possibilities - it is wise to keep a cool head and during this period of uncertainty, look to seek advantages.
Property - traditionally resilient
Throughout history, the British property market has remained resilient. During the financial crisis of 2007- 2008, when the global financial markets were on the verge of collapse, house prices in Britain outperformed the FTSE all-share index1. Property demand, from domestic and foreign investors has helped prevent the prices collapsing. In the long run, it generates an additional effect - the more limited supply is, with steady demand, the more the prices can potentially continue to grow.
Continued housing shortage
As a result of population growth, (thus increased demand) and a lack of public investment, there is currently a shortage of available housing across the country. Potential first-time buyers will continue to find it hard to meet mortgage costs and are therefore likely to continue to rent. Net dividend yield on property has been a stable source of income for some investors, and with wise investment, property can provide a stronger return, when compared to the current Bank of England interest rates2.
Long term prospects
Our experts are confident that the medium and long-term prospects for the UK residential housing market remain stable. The eventual price fluctuations in the short term are likely to have limited or no further impact on the yield of investment in the future. Even after the Brexit results, and with uncertain times ahead, it is sensible to remember there is still a need to find carefully selected investment properties which is why our due diligence process is so stringent. In uncertain times, the reckless lose their heads, the wise search for new investment opportunities.