The effects of the vote to leave the EU on UK property will be difficult to predict until the negotiations with the EU are known, but short-term volatility can be seen across the industry.
As a result of sterling weakness since the EU Referendum, UK property is about 11% cheaper for dollar and euro investors (as at 24 August 2016). Philip Eastwood, London Head at The Buying Solution,the buying arm of Knight Frank, noted that a number of dollar and euro-based clients saw value and opportunity in the UK property market. Eastwood also noted that “there are a number of developers who are interested in taking discounts and this is set to continue as the volume of new developments becoming available in London continue to rise”.
Cheaper for euro and dollar investors
The market for existing homes or the “second hand market” in London appears more resilient than the new build market as many vendors are reluctant to lower prices and are not forced sellers. Eastwood said “we may see a shortage of new houses and flats coming to the market, which will go some way to insulate the market.”
The Home Counties market is similar to London although it is patchy and remains very price sensitive. According to The Buying Solution’s Country Head Jonathan Bramwell, areas like Sevenoaks and Tunbridge Wells that rely on buyers who are tied to The City “saw a lot more renegotiations after the Brexit result”. Other areas that have a more international market and driven by factors like proximity to Heathrow and good schools are “more buoyant, with competition still continuing for best in class.”
The country market within a two-hour radius of London, where there is quality schooling and decent transport links back to the capital, has seen a surge in activity as needs-driven buyers decided to get on and buy. Bramwell noted that “Brexit has allowed selling agents to bring vendors expectations down and this has meant offers that were being dismissed as too low in May are now being accepted”. Bramwell commented on areas such as the North Cotswolds around Oxford, Stow-on-the-Wold and Banbury, which have seen strong competition for houses in the £1 to £3.5m range. However, he noted that the market for homes over £5m was more challenging, though there were signs of life with a handful of deals agreed in July.
For the home counties market, Bramwell noted that there are already signs of a severe shortage of buyers and supply is also likely to remain restrained for the remainder of the year. “Sensible pricing will be the key to sellers getting a successful result,” he said.
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