Recent surveys are suggesting that we might see a rise in property investment across the UK after leaving the EU.
This is mainly seen in the impact on investor behaviour since Article 50 has been triggered, the UK’s decision to leave the European Union. In fact, over one third of investors surveyed have not invested since, with one in five specifically stating that they are waiting for the dust to settle over Brexit.
A strong recovery
It is easy to assume that the economy, and thus the property market, will suffer as a result of Brexit. However, most investors surveyed predict that the market will make a strong recovery after the first 12 months of Brexit. Of these investors, two thirds believe that the market position for buying and selling property will be strong.
Of course, these are only gut assumptions, but as investors are the ones driving the demand in the market, you would think this is a pretty strong indicator. In addition, industry experts in the finance sector suggest that, although there will be some initial turmoil as the market reacts to the change, the long-term outlook is also positive, with many predicting a ‘post-Brexit boom’.
Should investors take the plunge now?
If we are to have a property boom after the UK leaves the EU, pending a deal of some sorts being reached, there is a case for investors to make the move now.
The rate of Sterling, when compared to common currencies such as US Dollars and Euros, is at its lowest average rate over the past decade or so. Overseas investors would see benefit in making the investment now, with benefits being seen in exchange rate gains alone.
But the significant benefit here is the uncertainty in the market. Many are being risk adverse in the current, turbulent market, meaning that investors have more options at a lower price, with demand driving the price of sale down.
Of course, it is easy to understand why amongst the confusion investors are waiting for some clarity in the market, but those that take the risk could be those that benefit. If we are to see the property boom, like many are predicting, demand will increase the price of property when investors do make the decision.
A tried and tested approach
This approach is taken by a large number of experienced property investors. A tried and tested approach to investing is waiting for a downturn in the market. i.e. now, whilst there is more scope to negotiate better prices and there is less competition.
The investor then holds the property over the next decade or so and benefit from both capital gains and rental yields – both of which will be greater as the market begins to recover and grow. By waiting until the market becomes more stable, although you have a clearer picture about the direction of the market, you will be faced with increasing prices and greater competition.
Of course, property is a long-term investment. Most investments require you to perfectly time the market in an attempt to maximise profit in the short term. In most cases, investments are then turned over after a short period, or in the case of stocks, as little as a few days.
Is now the best time to invest?
Ultimately, you are taking a risk if you do opt to invest now. Should the UK face a no-deal Brexit, property prices may fall post-Brexit. We cannot possibly predict how the housing market will fare in the medium to long term, and any ‘expert’ that claims otherwise are ultimately taking estimated guesses.
What we can say is that, for those that are looking to secure a real return on investment, now could be a fantastic time to take advantage of the instability in the market and secure yourself a property bargain.
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Interesting related article: “What is an Investment?“