It was one of the most seismic political shocks in years and has continued to overshadow daily life ever since, but how has the UKís decision to leave the European Union affected the property market?
Itís now more than two years since the June 2016 vote and, of course, Britain is still in the process of leaving. Withdrawal is set to be complete by March 2019 (although doubts remain about whether that target will be hit), followed by a transition period as the UK and the EU adapt to the new post-Brexit landscape.
During the lead-up to the vote, and immediately after it, there was doom-laden talk about a property crash (of the like last seen in 2008 at the height of the global financial crisis) or property prices falling off a cliff.
That, however, never came to pass, and the property market has largely been on a steady footing despite the challenges posed by a drastic fall in the value of the pound, the formal triggering of Article 50 to start the countdown towards Brexit, global economic uncertainty, and political strife in the form of a snap general election where the Conservative Party lost its majority and had to rely on the support of the DUP to form a minority government.
One of the main reasons for the property marketís resilience has been its position as a leading investment class. For a number of years now, property has been a far safer bet than stocks and shares (or other forms of investment) for those wishing to make money quickly or long-term.
Demand for residential property has remained strong despite external challenges. Whatís more, rather than being put off by Brexit, overseas investors have taken advantage of the weakness of sterling and favourable buying conditions to pump money into both residential and commercial property. A survey conducted by Market Financial Solutions (MFS) at the start of this year found that over half of investors (53%) would rather direct their money into traditional assets such as property than newer, potentially riskier asset classes.
Some 63% of investors also believe property to be a safe and secure asset, with the ability to generate and deliver solid long-term returns. In times of political and economic uncertainty, investors tend to seek out safe and secure assets Ė so itís little surprise that property, and especially property in London, has been viewed as a safe haven for investment.
At a time when low interest rates make it almost impossible to get good returns on traditional savings, and when the UK stock market is undergoing some struggles (the FTSE 100 Index, for example, slumped by 8.3% during the first quarter of 2018, mostly as a result of Brexit uncertainty), the popularity of property isnít hard to fathom.
The consistent growth in average house prices in the last two years is further evidence of the stability and strength of the property market, as well as being a reflection of the ongoing demand-supply imbalance in the UK. After a period of uncertainty before and after the referendum, people soon took a business as usual approach and transactions started to pick up again.
Itís still very much a sellerís market, even despite recent price falls in London, with the average house price in the UK exceeding £226,000 in April 2018, up by 3.9% on the year before and 6.6% greater than June 2016.
Propertyís status as a reliable, popular asset class, coupled with steadfast demand for homes from first-time buyers and second, third and fourth steppers alike, has helped to keep prices high and the threat of a dramatic crash firmly at bay. While the fundamentals of the property market remained the same Ė with demand continuing to outstrip supply despite efforts by the government to address this Ė any talk of prices falling off a cliff was always going to prove fanciful.
The rate of price increases might have slowed in recent times, as supply has started to catch up more in certain areas and the government has sought to make investment in buy-to-let less attractive, but prices have been steadily increasing since June 2016 and there are no signs that this will change anytime soon.
Meanwhile, in the private rented sector, demand and rents are also on the up. The PRS now accounts for 20% of all households and is the largest form of housing tenure in London. With affordability still an issue for many buyers, the number of people renting privately is expected to rise significantly in the coming years, with a growing number of retired and middle-aged renters joining the huge numbers of millennials opting to rent (either out of choice or necessity).
While rents and property prices are both rising, there has been a decrease in the number of mortgages being approved in recent times. In the first quarter of this year the value of mortgages approved stood at £61.1 billion, a 5.9% decline from the final quarter of 2017.
In recent years tougher lending criteria and more stringent regulations have ensured a longer and more complicated approval process. As a reaction to this, there has been a rise in alternative finance Ė where people look to options outside traditional high street banks and lenders to help fund property purchases. Annual bridging completions by members of the Association of Short Term Lenders, for example, now stands at approximately £4 billion, and is rising all the time.
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Brexit hasnít slowed down the property market, and with Gnomen on board, your business will be in an excellent position to take advantage of a thriving sector.