Regardless of fears, the British property market is not falling off the face of the earth. Due to the crash of sterling, UK estate agents have been swamped with calls from foreign buyers looking to secure a bargain, specifically in the capital.
Since the Brexit result was announced, domestic buyers have been spooked by uncertainty and more and more buyers have been pulling out of sales.
“The sharp fall in sterling will be seen by investors from around the world as a buying opportunity,” states Simon Barry, head of new developments at Harrods Estates. During the 48 hours after the result that the UK was to leave the EU, Mr Barry received a barrage of calls, predominantly from Middle Eastern, African and American property investors.
Although many are not happy with the number of foreign buyers in the capital, it is currently these individuals keeping the property market afloat in the UK whilst domestic buyers remain fearful.
Stirling Ackroyd, a London estate agent, has estimated that buyers from the Eurozone have gained a €33,200 discount on the average London house price in the wake of the referendum. Agents said that the depreciation in sterling meant that the average price of a house in London now equates to just €579,200, compared to a record high in November 2015 of €630,100.
Post-Brexit property planning
Despite the vote to leave the EU and the diminished confidence in the property sector, estate agents and developers state that demand remains high. Shares have fallen since the vote and many property developers have been updating shareholders on their strategies to deal with the potential challenges posed by Brexit.
The whirlwind of confusion and concern has prompted estate agents to insist property remains a sound investment.
Terry Sterling, a branch manager of Haart comments: “Our new applicant levels remain strong and I would encourage those with properties already on the market to hold a strong position and to remain confident in achieving a sale for their home.”
Furthermore, chief executive of Haart Paul Smith said: “Property remains a great investment even during this short period of uncertainty following the Brexit result. The critical shortage of housing in this country won’t change due to a temporary dampening of demand, especially with 80% of young renters who remain desperate to get on to the housing ladder."
The Brexit vote has led to a period within which developers, lenders and investors are waiting to see the real extent of the political and economic fallout and the knock-on effect this will have on the industry. However, while many are sitting back and letting the results pan out, those who are coming to the market sooner are benefitting from reduced prices and quicker sales.
Experts suggest that a trick for investors and developers during this uncertain time is to spot opportunities and get in early.
Could Brexit benefit the property industry?
Property developer Mark Quinn, managing director of Quinn Estates, predicts that house prices will stay steady this year. He comments: “I don’t think house prices will fall. They will remain pretty stable. There are a million people coming to this country each year and there are not a million houses being built. To cope with what is going to happen this year we will have to build more houses. It is the fundamental rule of supply and demand.”
Mr Quinn is also one expert believing that Brexit could end up having positive outcomes for the property industry.
“We are in a new world,” says Mr Quinn. “It makes for interesting times. Volatility brings opportunity. It’s going to be difficult but we have got to be ready to work hard, get our head down and go for it. The reduction in regulation and EU directives will help the commerciality of our business but there will be difficulties too. It will certainly be harder to get people to invest from the outside of the country.”
Managing director of property developer Millwood Designer Homes, John Elliot, agrees with Mr Quinn, putting forward the opinion that the move would be good for the future of British house building. He states: “Our exit from the EU will stop the continual flow of red tape and see our housing market grow and flourish without unnecessary constraints placed on building much needed new homes. I am excited to get on with the new world and see the back of EU laws which have been detrimental to us for over 40 years. One of the UK’s biggest assets is our home grown housing market and this will now be much better off out of EU regulation.”
Should you still buy?
Despite palpable anguish, experts are suggesting that those who have found their perfect home should go ahead with transactions and not be put off by political play. Many plainly state that if an individual has spent a year looking for a property, found the property and are under offer, the Brexit result has not changed this.
David Galman, sales director at Galliard Homes, said that property is still a reliable investment for domestic and overseas buyers alike in the UK.
“Buyers, whether they are owner occupiers or professional investors, need to remember that, long term, property is still the best performing investment asset class around,” states Mr Galman. “The huge shortage of London property against strong domestic driven demand has not changed overnight just because of Brexit.”