Brexit … the never-ending debate splitting households, communities and Westminster.
In the latest development, Britain’s departure from the European Union has been pushed back again with EU leaders agreeing a further extension to Article 50. The 6-month extension prolongs the leave date to the 31st October 2019 in the hope that bipartisan discussions between Tory and Labour MP’s will result in a deal, or potentially push the decision back to the people via a second referendum or general election.
So how is Brexit affecting UK property? The average price of a house in the UK dropped to £233,181 in Q1 2019, although this remains 2.6% higher than the same period in 2018.
In fact, oblivious to the political circus, UK property prices have increased fairly steadily throughout the Brexit negotiation period, albeit slower than they have done historically.
So where to from here?
Whilst it is difficult to speculate on the exact timeline and outcome of Brexit negotiations we expect to see a bounce as and when a deal is ratified. This will stem from pent up retail demand returning to the market, having sat on the sidelines particularly over the last 3-6 months.
Interestingly Brexit has not reduced the appetite for institutional investors taking a longer term view of the UK rental housing market. Legal and General, Far East Consortium, M&G, L&Q, AIG, Peel Holdings and Abu Dhabi United are just a few of the major players who are active across Manchester and the Northern Powerhouse region more generally.
They are funding new residential developments and large scale regeneration projects that they’ll hold on balance sheet long term because of the structural shift towards renting, particularly in one’s 20’s and 30’s. There is a clear focus here on catering to this new generation of young residents, with central locations and high-quality amenities being the key selling points across these projects.
Our key takeaway from this: now is not a time for short term speculation, but for those who consider the long term demands of young residents there are great opportunities to secure good quality stock given reduced competition from retail investors.