The announcement that “Leavers” had won the 2016 independence referendum understandably prompted a slew of newspaper headlines many of which revolved around what it would mean for investment in the UK.
Pro-leave media anticipated a glorious future of international trading relationships, while pro-remain media dreaded an inglorious future of miserable isolation unless the UK government negotiated a soft Brexit. Almost three years later, however, it would appear that, as far as the UK property market is concerned, all the media sound bites and fury have signified very little.
Brexit does not appear to be a major factor in property-investment decisions
According to a survey of 500 British property investors by bridging lender Market Financial Solutions, 64% of investors have not let Brexit impact their UK property investment decisions since the EU referendum in June 2016 and 57% of British property investors do not plan on changing their investment strategy, despite the extension of the UK’s Brexit deadline.
The same research shows that only 7% of UK property investors have reduced their property portfolio due to perceived concerns about Brexit, by contrast, 45% of the surveyed investors have actually expanded their property portfolio since the EU referendum.
Brexit does not significantly change the underlying drivers of the UK housing market
The intense media speculation regarding the fate of EU nationals in the UK (and UK nationals overseas) may have given the impression that EU migrants were a significant demographic group and hence that their wholesale departure would have seen the UK grinding to a halt.
In reality, however, the hard fact is that EU nationals only form a very small proportion of the UK population as a whole (as of 2017, there were 3.7 million EU migrants in the UK, putting them at slightly under 6% of the total population), which means that even if they were all to leave and not be replaced (which is highly unlikely), their departure would still have minimal impact on the demand for housing in the UK.
This is even before you take into consideration the fact that many EU nationals are renters and that many of the UK’s “accidental landlords” have been exiting buy-to-let in response to various tax and regulatory changes, thus reducing the supply of rental property (although some of these properties are likely to have been picked up by professional investors).
Brexit does not appear to be significantly impacting the growth of the Northern Powerhouse
Property investors may not have abandoned London, indeed, they may even see its current stagnation as a buying opportunity, but at this point in time it’s almost impossible to dispute that, in terms of property investment, the real buzz is up north in the Northern Powerhouse, which is now far more than just a marketing slogan.
It’s a property-investor’s dream, a place with great affordability and excellent yields with a significant, and growing, population of young adults (natural renters), both students and professionals. What’s more, while Brexit will, presumably, have some impact on the local economy, the fact that it is highly diversified and already very global, can be expected to provide a helpful cushion against Brexit-related shocks.
