How has the Brexit referendum affected your property in Clapham, Brixton & Surrounds?
Well it's been an exciting weekend, what with the fallout of various political parties due to the (to some surprising) results of the UK's referendum.
The journalists, as usual, are doing an outstanding job of reporting mass chaos. The dropping pound, crashing house prices (some predicted 20% drops) and all time low consumer confidence. That's all good and well, but personally I think it's a bit soon to make such wild predictions (ahem - assumptions) over one single weekend right after the referendum results.
Many a property investor, myself included, have already come out and spoke of the opportunity these times represent. Let's look at what's happening, and my thoughts on the short-medium term. Naturally as with any of these predictions, it's only my view as a property person with nearly 15 years of experience in the South London property market. I don't have a crystal ball, but here is my 2p worth:
- The pound has dropped in value.This will actually help property prices in Prime Central London - a weaker pound means it's cheaper for wealthy foreigners to buy luxury flats. Ultimately the rest of London will benefit from this confidence (think ripple effect).
- Another reason for accidental and small landlords to sell up.Increasing red tape in the past 18 months or so, combine with the reduction of mortgage interest being fully deductible from rental profits has already caused a few smaller landlords to think twice, choosing for "easier" investments. The uncertainty (in future capital gains) will certainly make up their mind to sell straight away if they aren't already. We'll see a lot more smaller, more affordable units coming to market, creating more supply.
- First time buyers will see value and buy.Speaking to many of my estate agent colleagues up and down the country this morning I can assure you the mood is good - deals that have been agreed are certainly staying agreed. There are no signs yet of knee-jerk reactions. Goes to show that today's first time buyers will still be better off paying a mortgage as opposed to rent, as well as working to a long-term appreciation in their asset. Smaller landlords in my second point above will have already enjoyed medium-long term appreciation so they don't want a short term dip to eat into their total gains. Long term view buyers such as landlords will take the same view, although they may sit out for a month until the dust settles.
- Savvy investors that "buy to sell" will focus on smaller units in order to satisfy demand from the FTBs in point 3 above.I make no secret about it, it's a market segment that keeps on giving. Some property investors love luxury flats in superb locations, but First Time Buyers are often overlooked. What are their needs, what are their wants? Property investors focusing on the average buyer who wants a touch of luxury without paying through the nose will do well.
So there you have it. In essence I think the momentum the property market has gathered over the last few years will remain, but there will be different players in the property game. What are your thoughts? Share in the comments below.
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