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Property experts predict markets’ future after Brexit

Andy-Jalil
Andy-Jalil
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Among the various questions that arise before Britain’s departure from the European Union, one among those in the forefront is about the affect on the property market.
London’s housing market appeared little affected by the vote to leave the EU, but with March 2019 fast approaching, property experts have been weighing in on the future of residential and commercial markets.
Most are hopeful that while there will be a downturn initially, there should be a ‘Brexit bounce back’ soon after, wherein property prices quickly recover.
According to a recent report published by housing market forecaster JLL, the average price of a new build home in and around central London is expected to jump 17 per cent. However, the forecast does acknowledge the uncertainty surrounding Brexit and the problems it brings when trying to predict the future lay of the land.
The report states: “There are very pessimistic and very optimistic scenarios, but most produce a steady, stable and unspectacular economic growth profile in the long term. Rhetoric, matters of divorce settlement, transition arrangements and possible trade terms are changing daily.”
It adds: “But the route and the terms of leaving the EU (which may yet be modified despite the agreement made) will become clearer, gradually adding greater certainty to the government, businesses and households.”
Overall, the JLL report expects there to be a positive bounce back, but is uncertain just how strongly this will present itself.
In contrast to this optimism, Guy Gittins, managing director at Chestertons, a leading property company, believes that the sustainability of the bounce back is “questionable” as there will be a “readjustment period” post Brexit, depending on the final terms of departure — as currently there remains much disagreement even within the government.
Areas that have the most optimistic outlook seem to be located outside of prime central London where house prices are lower, but that doesn’t mean conditions in the City (financial district) aren’t optimal for growth.
Builds that focus on adding cultural and visual value to the area are more likely to succeed in attracting buyers post Brexit. Gittins said: “When long-term confidence in the London property market returns after Brexit, we are very likely to see many more first-time buyers taking advantage and this will stimulate the market.”
Head of London Residential Research at Knight Frank, Tom Bill, added to the debate through its recent London Review report.
It stated that Brexit negotiations have impacted decision making, but while the number of sales transactions have dipped in response to the uncertainty, pent-up demand is forming.
The report says: “There is also evidence that far fewer jobs have been relocated from London that initially estimated as a result of Brexit. As few as 630 UK-based finance jobs have been moved overseas ahead of Brexit, recent analysis by Reuters showed.”
Adding: “Indeed, a rise in the number of deals and inquiries involving relocation agents underlines the strength of demand from corporate tenants.”
Meanwhile, quite apart from the affect that Brexit may have on the property market, the plight of young aspiring home buyers continues.
The number of young homeowners is on the decline and this year it is 26 per cent lower than the total who owned their house back in 1991. It illustrates the extent of the decline over the years.
A study by MoneySuperMarket blamed rapidly increasing house prices and a much slower increase in salaries as the reasons for the decline. Many are going into shared ownership scheme to get their foot on the property ladder.
A surge in renting has gone hand in hand with the decrease in home ownership among young people up to the age of 36.
The study also showed that there has been a 30 per cent increase in renters up to that age. The price of all properties has gone up over time, but none quite so much proportionally as flats. The average price of a flat in England is £290,557, just under five times higher than the average price of buying a flat in 1996 when one could purchase for £59,016.
By comparison, the cost of a semi-detached house now is 3.7 times higher than in 1996, at £245,272 on average.
Government regulation has been touted as fundamental to encouraging change, and there was some recent good news for prospective purchasers, with the latest Budget outlining the abolishing of stamp duty for first-time buyers. (The author is our foreign correspondent based in the UK. He can be reached at andyjalil@aol.com)



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