For sale sign on the exterior of a renovated stone aparment building in a city centre (Photo by Albert Pego from Shutterstock).

The Impact of Brexit on the Property Market in the UK and the EU

by Kate Bregovic

According to recent reports, Singaporeans aren’t satisfied with their housing market, which isn’t a surprise. This, however, means that those who want to invest in real estate have to look elsewhere. Britain is one of the markets that might be tempting for investors because of the exceedingly high demand. However, before making any commitments in that direction one needs to assess the risks of Brexit and its impact on the property market.

That this impact will be significant is not in doubt. But according to the latest predictions reported by Financial Times these changes might be an opportunity for foreign investors who can benefit not only from lower prices but also from the weakening currency. GBP has been weakening since its big drop after the Brexit vote in 2016. As is shown in the BBC report, it is becoming getting more stable now, although it is still weak.

The pound will, inevitably, drop again once the Brexit is complete. The important questions here are “by how much?” and “how soon will it start recovering?” Those are more or less impossible to predict due to the large number of factors potentially affecting the outcome. However, with a further weakening of the currency guaranteed one might, using an affordable money transfer service, be able to take advantage of this golden opportunity of purchasing a UK property during these turbulent times.

As reported by Money Transfer Comparison, whilst GBP will weaken, even more so in case of a No-Deal Brexit, EUR will remain the stronger currency of the two. This has been the case for a while now and it’s not going to change for the foreseeable future despite the instability currently being experienced by the EU. Aspiring investors can certainly benefit from the currency guidance service offered by money transfer companies. At a time like this, expert counseling can help one to secure the most beneficial rates for property deals in both the UK and the EU.

The impact of Brexit on the UK and EU property markets

When Brexit was first announced, real estate experts issues warnings that such a major economic change will cause a drop in housing prices. At the time, some people were speaking of 18-20% drops, which would no doubt have a major impact on the economy in general and contribute to an inevitable recession.

But three years down the line, with Brexit now almost a reality, this major slump has yet to happen. Moreover, despite the increased volatility and uncertainty of the economy, the UK real estate market remains strong. The latest UK House Price Index shows that whilst prices in most of the UK have dropped slightly, sales and, most importantly, demand, remain high.

These dreaded price drops barely exceed 3%, and that only in a few select locations. On average, they are around 1%, which is a mark of impressive stability considering how uncertain everything in the UK is at the moment.

Now, expert opinion has the prices dropping by 5-6% as a result of Brexit, with the highest drops of 7-7.5% in London. Should these predictions come true, being a home seller in the UK will be rather bad. However, being a home buyer, especially one from abroad, will mean that you get a stellar opportunity.

Add to this the fact that the GBP will drop as well, your total outward investment will be even lower. This is a rare opportunity to enter a real estate market, which is so intense that even in the face of such major economic instability it remains strong. There can be no doubt that the drop will be reversed rather quickly. Therefore, any investment property purchased at the time will start bringing returns even before the UK economy fully recovers.

One should also be mindful that all this instability also affects other industries, which are somewhat connected to the real estate. Removal companies and renovation contractors are in for a rough time as they will experience a drop in business. Attorneys and agents, on the other hand, can stay active if they focus upon working with foreign investors.

DIY property transactions are extremely risky even if they are domestic. If you plan to buy a property abroad, doing it by yourself is simply not possible. The law will demand that you use professional agents’ and attorneys’ services to arrange all the relevant paperwork. Note that you might need to hire an attorney in both countries to help navigate the complicated tax and ownership arrangements.

These contributions can keep these professionals above water in the UK when the dreaded price drop happens.

The situation with the EU is a bit more complicated. Brexit is sure to have a major negative impact on the Union’s economy and real estate market. However, the particulars will be quite different for individual countries, so any aspiring investors will need to research each location separately.

One thing is for sure, the UK housing crisis won’t be resolved anytime soon. With the country’s economy showing great resilience even in the face of Brexit, any future slump on the property market will not last for long.

Bio: Kate Bregovic is a wife, mother, freelance writer and fitness enthusiast. She covers many topics – from business management trends to fitness regimes. When she’s not writing, she’s planning outdoor activities for her family, cooking or working out at the gym.  Follow her on Facebook.