Brexit and UK property

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Property investments in the United Kingdom are currently dominated by concerns surrounding Brexit.

Media headlines yesterday suggested that property prices could fall by more than 30 percent in a worst-case scenario if the United Kingdom were to leave the European Union without a deal.

“What about Brexit?” is rightly a timely question for anyone investing in UK property, as well as for anyone already owning UK property.

According to Property Frontiers, an award-winning UK-based international property and buy-to-let investment firm, the issue of Brexit has become the defining issue of our time.

Regardless of what side of the argument you are on, Brexit is also starting to feel like an invisible hand pulling the strings of the property market – and it hasn’t even happened yet.

“It is our firm belief that those able to tune out sweeping generalisations about the effects of Brexit on the UK property market – whether good or bad – stand to profit from the pockets of opportunity that inevitably arise during times of change like this,” the company said.

So why leave?

One common explanation for the leave vote is that – consciously or not – a person’s perceived share of the country’s prosperity and economic opportunity had something to do with the vote to leave.

One of the simplest and most significant sources of prosperity in the UK over the past half century has been ballooning equity through home ownership.

But in glaring and weirdly proportionate contrast, all but two of the top 20 local authority districts for rental yields (mostly regional cities) voted to leave.

“To grossly oversimplify these strongly correlated findings. People who have benefitted from massive equity growth voted for the status quo, while people who pay high rent relative to static property prices voted for change.”

Since the UK voted to leave property prices have not immediately exploded in leave voting cities, though they have generally improved.

Rather, the playing field with places used to constantly stellar growth has been levelled.

Property prices in London and most of its suburbs have divebombed as financial businesses seek alternative bases in Europe and the affordability crisis comes to a head, while regional British cities have mostly been serenely riding out the storm.

“If a fairer share in the country’s prosperity through home equity is what those towns wanted from the Brexit vote, they have succeeded so far.”

“But what this really serves to illustrate is that mainstream investment destinations no longer look so dependable, especially in light of Brexit.”

“Regional cities are now beginning catch up in the capital growth stakes, to match their superlative performance in terms of rental yields.”

“Savvy investors should take note and think about entering such markets while they remain affordable.”

That’s very much in stark contrast to the dire predictions that have made headlines in the past few days.

Andrew Batt
The author of this article is Andrew Batt, the founder and editor of Andrew has been writing about property and real estate issues in Thailand and Southeast Asia for more than 10 years. He has worked for PropertyGuru Group, DDproperty, Dot Property Group, Hipflat and AsiaRents. He has also produced content for leading Thailand property developers and real estate agencies.

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