With Brexit now looming just around the corner, the fear of what is going to happen to the UK’s economy is at the forefront of many people’s minds.
In the midst of the pollical chaos, there is now much uncertainty about the situation for the UK’s business sector.
Although the political side of Brexit is at an all-time high for unclarity, it would appear that the UK economy is almost business as usual, with markets actually seeming to perk up following the clarity from MPs that the UK would not be leaving the EU without some sort of trade deal, although it is still unclear as to what this will entail exactly.
As far as property investment is concerned, prices of property in prime locations such as central London are stabilising but there are no signs of a property crash.
Property investment specialist, Jamie Johnson of FJP Investment, says “the Bank of England had been expected to raise rates and probably would have done if there was more certainty over Brexit. It has to keep its options open.”
But with China’s falling GDP, and the continuing battle between China and the US over trade, the UK is in prime position if and when a deal is secured around Brexit.
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Residential property
There are few concerns currently surrounding the residential property sector. As an island, we have a growing, aging population, with a lack of raw materials and the necessary skills such as bricklayers needed to keep up with the housing demand. This is the driving force in the supply and demand of property investment.
Although we have seen growth in the residential sector, it is the slowest rate of growth we have seen for years, partly due to this inherent lack of bricklayers. In January in fact, house price growth across the UK was 0.1% – the lowest we have seen in six years.
The reasoning for this, according to the Royal Institute of Charted Surveyors, is the “Brexit dominated new agenda”. Whilst many are shying away from the investing in UK property, amongst new regulations being brought in making HMO property investments particularly challenging, savvy investors are buying up property at a discount.
Commercial property
We are seeing a ‘levelling off’ in commercial property value, with Brexit uncertainty dominating the market.
According to estate agent Savills, London’s commercial property sector received $26.9bn of cross border capital in 2018. However, as the vote fast approaches, people are shying away from investing in the market. Investment was down in London 17% year-on-year in the last quarter of 2018 – with a shallowing pool of investors, the market is suffering.
International investment
Not all investors are viewing Brexit the same way, however. Hong Kong investors are eyeing the UK market closely, and appear to be making the move, mostly due to the opportunities currently provided with the UK’s weaker economy. Total inflows for Q4 2018 were at their highest rate since 2016.
Clearly then, much as we have seen in 2018, the property market is continuing to ‘tread water’. Although there is continued uncertainty in the economy, overseas investors continue to snap up property bargains, helping to maintain some level of demand in the market.
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