Apartment buildings in London.
Although property prices in the UK may likely become cheaper, they are not expected to crash following Britain’s exit from the European Union, consultants told PropertyGuru.
“Property prices should not plummet. They don’t make land anymore and the UK already has a shortage of houses, so this should keep prices fairly stable. The government revised the stamp duty last April and this has slowed the market for multi-million pound properties,” said Stuart Shield, Publisher of International Property Media.
Brett Alegre-Wood, Founder of YPC Group, expects property prices to drop by around 15 percent initially due to the weakened pound, “but it will quickly recover to around five to 10 percent down”.
One of the first outcomes from the result of the referendum is that the value of the pound will inevitably fall in the near-term, as will the stock market, said Knight Frank.
As of Monday morning, the Sterling is down by around two percent against the US dollar at $1.34.
With this, London may see property prices fall by about five percent, and “maybe the same or less up north”, said Alegre-Wood.
“It’s important to realise that prices haven’t risen much outside London since the last recession, so they are unlikely to fall further,” he said. “London has a bit of room to move, but international clients moving in due to the suppressed currency will prop up prices.”
While he does not expect property prices to tumble, he foresees some panic selling over the next couple of months from buyers who over-committed. “But it will settle,” he said.
“My advice is to wait and see for a week, then consider your options. Things will be more stable then and we will have a clearer idea. A knee-jerk reaction is never the best course in these circumstances as property investors.
“If anything, it’s a massive bonus for Asian investors who have slowed down buying due to the rising pound as the UK economy got better. Now they will get a once in a lifetime discount, but only for the next three months,” he added.
David Hannah, Cornerstone Group’s Principal Consultant, noted that the UK property market will remain an attractive proposition for the global community.
“With the Brexit question now answered, we can expect an influx of activity in the market over the summer months from domestic and international buyers, as it was the uncertainty, rather than the actual outcome that has been stalling the market over recent months,” he said.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
