If there’s one word that really sums up everything flying around at the moment about the EU referendum, it would most definitely be ‘uncertainty’. Conjecture and speculation have been rife so far in early 2016, with experts from just about every sector giving their two cents about what a Brexit would mean for the economy.
Property has been no different, with many people suggesting that uncertainty followed by a potential loss of the safe haven reputation the UK’s real estate market enjoys could result in a possibility of lower demand and falling prices.
But is Brexit really the biggest threat for the property market in the UK, and are there even other factors that could be more damaging and problematic for the sector in the long run?
According to Rishi Passi the chief executive of Oblix Capital, while it is true that the UK’s market, and particularly the London property sector, would lose its status as the very definition of a safe haven, Brexit would not necessarily turn buyers away from the market, and particularly not those coming from overseas.
Writing in City AM, Mr Passi said that in the case that Britain did choose to leave the EU, while it would cause the pound to fall, this could well encourage foreign investors. Those from countries using the euro would suddenly see themselves able to get a bit more for their money thanks to the softer sterling, while the immediate instability in the market would mean the chance to invest in property that is highly likely to recover at a later date.
He also said that bigger threats to the UK property market could include a rise in interest rates from the all-time low they currently sit at, and the slowing down of the Chinese economy. A softer economy in China would mean less chance of people from the emerging nation looking to spend their money in other countries.
Less inward foreign investment?
When we consider that there has been a real rush for British property, especially in the build-to-let market in the north of England in the last few years, this could provide a significant dent in the volume of money coming into the property sector in the next few years.
So, while it is likely that a Brexit vote would mean some sort of uncertainty and loss of stability in the property market in the UK, it’s not the only factor professionals need to look out for, and perhaps not as disastrous as early fears would suggest.
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