The Side Effects of Brexit on the Real Estate Market

Samuel Oskys13/07/20192min
As the United Kingdom continues negotiations with the European Union the future relationship is still not clear. While no one can say for certain how the UK will be shaped following Brexit one factor that is evident is the effect on the real estate market.

Short Term Effect

BNP Paribas Real Estate comment “The fall in the UK’s investment volume could reach 25%-30%, with capital values in City offices falling the most, by 15%, and by 10% in the West End. These will be driven primarily by rental falls, on the back of further weakness in the occupier market.” The negative effect could be to a lesser extent if a deal is agreed, but nonetheless, there would still be a negative effect. “Investment volume is expected to fall by 11% with an average capital value fall of 5% p.a. over the next 3 years in London.”

Transactions of homes in central London last year reached a decade low, according to LonRes, the data group. Overall, year-on-year house growth pricing across the UK in January was at its lowest in six years, with a small increase of just 0.1 per cent, according to the Nationwide index.

Long Term Effect

The long-term effects on the real estate market are somewhat unclear. The form of Brexit itself will influence peoples political and economic views leaving buyers confidence in a large role than that of affordability house price movements.

Investment Remains in the UK

Despite the downward figures the UK’s real estate market still benefits from international investment. Many Americans are entering the UK property market with 3.1 billion USD from Jan 2018 to mid-August 2018. Although this is a slower pace of investment, the investment remains.

A large factor for US investors is the decreased prices of the Pound when converted into US dollars. The British pound, which has decreased by about 15% against the greenback since the Brexit vote in summer 2016, makes it more economical for dollar-based investors to obtain property in the UK.

Samuel Oskys

Sam Oskys is a British born technology enthusiast, automotive lover, artist, author and editor. His inspiration has been his life experiences; his evolution and adaptation in society and life itself and as a result, translated these emotions into art and words within his work in this duration. Writing about trendy, technology, automotive and lifestyle-related material is what he mainly focuses on and he’s currently one of the authors for High Worth Citizen. Contact Sam at +357-22029786 ext: 6115 or by email at [email protected] for editorial related questions.

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