Brexit And The Property Market
For a number of years now, UK politics has been engaged with the topic of Britain’s role within the EU – handily titled the ‘Brexit’ debate by the press. With a referendum pencilled in for June, an extensive discussion has taken place alongside a refugee crisis, an upturn in UK economic activity, the changing stability of the Euro currency, threats of a potential market crash and a new UK Conservative-only government in 2015. Our question in the midst of all this is – what could the Brexit mean for the London and UK property market?
The arguments for and against the Brexit are many, based as they are on a long and complex history of exchanges. UK opinion is currently divided, with 2015’s leaning towards staying in the EU countered by a sway in the opposite direction this year. In government, the Conservatives are also divided, with David Cameron negotiating new terms with the EU with the aim of staying in while London mayor Boris Johnson announced his decision to back the campaign to leave.
Leaving the EU would likely increase the complexity involved in making trade arrangements with the other EU countries. Does this mean that the property market would suffer? Not necessarily, according to Boris Johnson, who argued recently that leaving would give the market greater overall freedom. While remaining within the EU would avoid additional restrictions on trade within the EU countries, Boris believed it would be possible, given the strength of the market in Britain (whose power is centred in London) to negotiate deals more freely without the restrictions involved when part of a common marketplace. There would be a lot of work to do, though, to make more connections with non-EU investors when trade with European countries makes up such a significant proportion – over half – of international exchanges.
It is true that property in London is valued extremely highly as a form of capital – the market in the Capital is certainly healthy, with investment levels high from both EU and non EU internationals. Boris’ comments reflect the strength of the London market and the fact that overseas investment is generally seen as a positive thing. In other words, investment in London – and the property prices in the UK – are likely to remain high, EU or not.
From the perspective of the London property market, there appears by all accounts to be enough solid investment and financial interest from outside Europe – and enough scope for negotiation – to suggest that the market won’t change too drastically if the UK leaves the EU. In fact, as Boris suggests and others have echoed, leaving the EU could usher in an exciting new era of possibility.