Brexit bounce and what does that mean for property investment

  • 11 months ago
  • 1

As the Brexit bounce delivers annual house price growth at a 14-month high

Property investors should be preparing now for a bounce in London property prices when the UK leaves the EU. This is what several experts are now predicting for the London property market, with almost three years of experience of Brexit uncertainty behind us.

It has been forecasted that between Brexit day 29th March 2019 and 2023:

  • The average price of new build homes in Zones 1 and 2 will rise by almost 18%
  • Luxury property prices will rise by 15.3% in Central London
  • The average price will rise by 14.3% across Greater London

So, while we may not see a sudden boom in property prices in London, there is likely to be a more measured return to a rising market. Experts are so positive about the potential for property investment to produce great gains in the coming years

The question where might it be best to invest for growth in London?

Some of the hottest areas for investment in London property are found in Outer London right now.

  • East London Tower Hamlets, Hackney, Redbridge, and Waltham Forest
  • Locations that are likely to benefit most from infrastructure projects include those on the Crossrail 2 route, such as Haringey, Wood Green, and Battersea

Elsewhere, interest rates are also likely to begin a gradual process of normalisation in 2020, which could mark the end of a period of ultra-low mortgage rates and squeeze affordability for some purchasers. Even so rates are expected to be low compared to long-term norms by the end of the forecast period, with economists expecting interest rates of below 2% by 2023.

Overall there is a forecast of price growth of 2% across the UK in 2020 and of 15% cumulatively between 2020 and 2024.

The Key Economic forecasts for 2024

  • 6.9% Increase in GDP over the period
  • 1.7% Forecast Bank of England base rate in 2024
  • 6.8% Increase in real household disposable income over the period
  • 2.7% Increase in total employment over the period

A significant number of individual landlords and investors quit the BTL market last year, thanks to higher stamp duty costs and the phasing out of mortgage tax relief. In  2017 estate agents reported an increase in landlords selling properties across their branches.

The good news?

Some landlords deciding to move away from the rental market, demand for remaining properties has fiercely increased, meaning many landlords are experiencing additional interest in their properties and, in some cases, demanding slightly higher rents

Ultimately, it is not Brexit that is posing the biggest risk to the rental market, but government intervention, so landlords and tenants alike ought to stay up-to-date on progress within the property market as a whole. However, with landlords benefiting from mortgage rates still nearing an all-time low and tenant incentives such as  ‘No Deposit Option’ helping more tenants get in on the rental market, there continues to be plenty of room for landlords and tenants alike, regardless of ongoing Brexit negotiations

BMV Market is the perfect place to find a property below market value to add to your portfolio.

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