One of the unfortunate consequences of the Brexit process has been the endless handwringing regarding the UK property market. Many have worried about whether the sector is viable in the long term and whether it is a good time to invest – and fairly enough.
However, the underlying numbers have shown consistently that, in the long term, investors should not be overly concerned. The pace of construction is far slower than what is needed, and therefore there are fewer available homes to purchase for a growing pool of renters. In turn, the competition for the best rental homes is growing fiercer and rents are going up across most of the country.
With no sign of the housing crisis being solved, more and more people are renting in the long term and the future of the sector looks secure. In addition, the government is making the rental sector more appealing by passing legislation such as the Homes (Fitness for Human Habitation) Act 2018 and the Tenant Fees Act 2019.
With all of that in mind, it is no surprise that an increasing number of foreign investors have chosen now as the right time to invest. Not only are the conditions favourable, but the Brexit process has caused a weakening of the pound which enables people from outside of the UK to effectively operate at a discount.
The latest buyer and seller survey from Hampton’s International shows that foreign buyers purchased more than half (57%) of homes in Central London in the second half of 2018, and more than a third (26%) of homes in Greater London over the same period. The latter represents a 5% increase over the second half of 2017 and a 15% increase over the last six months of 2015.
This is the highest level since 2012 and Aneisha Beveridge, head of research at Hampton’s, said of the figures: “Sterling’s weakness, making it cheaper for many international buyers, seems to be outweighing Brexit uncertainty when it comes to foreign buyers making a decision on where to buy a home.
“A property that would have cost an EU buyer £1m in H1 2016 effectively cost £124,000 less in H2 2018 due to sterling’s depreciation.”
Confirming that economic conditions are not having any real impact on property investors, new figures from SevenCapital show that 85% of high net worth individuals currently investing in property are choosing the UK despite Brexit. Furthermore, nearly a quarter (23%) of respondents from the UK actually cited Brexit as the catalyst for them to invest.
At the end of the day, if the long term prospects of the market were poor, would these investors really be attracted by a relatively small discount due to the weakness of the pound? A cheaper price is always preferable, but the fact that so many seem to have been waiting for the right time – rather than abandoning the sector entirely – shows the truth that UK property is still a strong and attractive investment destination.
And whilst the figures cited above are focussed on the London market, they can be extrapolated across the rest of the UK. After all, if people are attracted by a slight discount in a city where the average house price is more than £600,000, then they are surely going to find high-yielding apartments in booming cities like Manchester and Sheffield attractive as well – with the main difference being that they can purchase their next property at a significantly lower entry price.
Brexit uncertainty is certainly something to bear in mind, but it is clear from the actions of property investors from around the world that the UK market is still attractive to many and is likely to remain so far into the future.