By now the reality of Brexit has sunk in; whether it be shock or possibly even relief, we now have no option but to look and accept the future for what it is.
With so much still hanging in the balance, vendors, buyers, landlords and even tenants are at a lost with the direction this industry will go.
For so long have we focused on the luxury property market - ongoing leaps and bounds has seen the commercial market has followed closely behind. Yet now, it’s time to turn our focus on the commercial property market with analysts of French bank Société Générale, predicting that Brexit may trigger the end to this seven year long house boom.
“While in recent stress tests the major UK banks were assessed with declines of about 30% in commercial real estate prices, we fear that London residential could experience an even more severe downturn,” they stated.
Whilst reports from the Office of National show that house prices were surging in the run up to the referendum, with numbers increasing by 1.2% in May; many industry analysts advise that these results may not be 100% accurate as they were made based on the inclination to remain. These suspicions were confirmed by Andrew Bridges, the managing director at Stirling Ackroyd, who told the Guardian; "Since these figures are for May it’s likely that house prices have already fallen to some extent in parts of the country. British property buyers are weathering a storm of uncertainty, and the hatches were battened down a little in the first week or two after the Brexit vote."
But let’s not forget the changes in stamp duty legislation which were pushed into motion earlier this year. As of April 2016, an extra 3% was added to the bill of those looking to purchase a second property. This increase warded off those looking to invest and develop their property portfolio and as a result the sale of properties slowed. Mark Lawrinson, regional director of Portico Estate Agents confirms that “The prime central London market was showing signs of a slowdown prior to the referendum, and in areas of central London, we had seen prices start to soften following a decline in the number of transactions.”
With other factors like the weakening value of the pound also taken into consideration, sites like Landlord News predict a boost in the number of people looking to rent. If this prediction comes true then rent prices would go up, ultimately attracting landlords to the market. This is why right now it is imperative that buyers and investors purchase the right properties. Although, uncertainty and doubt seem to be holding buyers and vendors back, we recommend that you speak to an industry expert for the most up-to-date and tailored advice. Feel free to contact or come by our office, to speak with a member staff about your best next move.
Whilst the market is slowing and are prices dropping, we cannot forget the value in London itself. This city is still a close haven to the remainder of the EU but with further ties over the world. The market has hit a slump but it’s not forever, which is why we need to hang in there as we always have because something always gives.