Overcome nerves to find bargain investment opportunities
Beginners in property investment have probably found that the last couple of months has raised more questions than they’ve answered. After the Brexit vote, even the experts can’t agree on where property prices are heading.
In this article, I’ll look at some of the predictions for UK property prices in the new post-Brexit economy, and at what has been happening. Using our property investment news you can be more informed in five minutes than you will have been in countless hours of television news and countless pages of newspaper commentary.
French bank says the Brexit could take 30% off London property prices
Less than a month after the EU Referendum, there has been a surge in property investment news such as from Société Générale saying London property for sale could fall in price by more than 30%, especially at the luxury end of the market. It expects foreign banks will relocate to continental Europe, pulling wealthy bankers out of the capital.
The bank went even further when it said, “We see a classic housing bubble in London and Brexit as the trigger for the correction… Given the current ratio of prices to incomes in London, a price correction of even 40-50% in the most expensive London boroughs does not seem impossible.”
SG’s analyst Marc Mozzi said that the stretched housing market in London could be broken. He expects up to 3,000 senior employees will be forced to sell their homes in London’s exclusive boroughs by relocation abroad.
Savills expects prices to be supported
Property investment news is split on the issue , Savills, the real estate services firm, expects the new government to be “highly motivated to protect London’s position as a major global financial centre”. It expects London’s property prices to be supported by:
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- Positive negotiations between the government and the EU
- Low-interest rates (the Bank of England recently cut rates again)
- Increased interest from foreign investors looking for bargain investment oppotunities as the pound weakens and makes London property cheaper in their currencies
RICS says house prices could take off next year
Just shy of a month after the SG analysis was published, The Royal Institute of Chartered Surveyors (RICS) said that the housing market had certainly slowed after the Brexit vote.
It said that new buyer enquiries are falling. However, it also said the number of properties for sale is at a historic low. This tells me that both buyers and sellers are confused right now. The RICS survey concludes that:
- Overall, surveyors expect a mildly negative market in the next three months
- There has been a rebound in confidence for prospects over the next 12 months
- Property prices are expected to increase by an average of 4% in London and 3% elsewhere over the next five years
Its conclusion is that property experts believe London and UK house prices could take off next year.
So what can property investors expect UK property prices to do?
As you can see, predictions for property prices in the UK (especially in London) range from bust to boom. In other words, the experts know just as much as you.
(You might like to download our free investment guide “How to predict house prices” for more information.)
What I can tell you is that property prices follow a cycle. By identifying where we are in the cycle, you can adjust your property investment strategy accordingly.
The mistake that many beginner property investors make is thinking that all property is at the same point in the property market cycle at the same time − this isn’t the case. Local factors (such as infrastructure build, local economy and jobs, and regeneration projects) are more important to the property investor. If they weren’t then the principle of ‘location, location, location’ simply wouldn’t exist.
What you can do to make the best investment in property
In his article on his property investment blog “The Brexit effect on house prices” – written just a few days after the shock result of the EU Referendum – Brett Alegre-Wood takes a look at what he believes Brexit means to the property investor. This isn’t a blanket forecast, but analysis based upon his Ripple Effect Pentagon. Some areas will be worse affected than others, and some will continue to provide oppotunities for excellent value and capital growth.
And this gives a clue to one of the keys of successful property investing: do your research. If you find investment opportnities with good property fundamentals, then your investment should pull through in good shape. One advantage that Brexit has certainly given property investors is the potential to strike an excellent deal.
In the meantime, if you are an undecided investor, why not call me or one of the Gladfish team today on +44 (0)207 923 6100 As you’ll see when you read “The Brexit effect on house prices”, we look at each investment opportunity on a case-by-case basis. If we think that now isn’t the right time for you to invest, we’ll let you know.