Brexit: What should a property investor do?
I’m adding to the millions of words already written about Brexit but, as an expert in buy to let property, I want to get involved! I hope you find this article helpful and interesting, especially if you’re thinking of buying property in Scotland.
The questions are;
what is happening to the Scottish property market right now?
what will happen to property values after Brexit?
Before we start, please bear in mind that I’m an optimist. I feel it doesn’t make sense to be anything else but of course we also have to be realists and consider the facts.
What is the property market doing right now?
It’s slowing down and it would be crazy to suggest otherwise. It’s perfectly sensible and natural that it should slow down right now, after a period, at least in the cities of Glasgow and Edinburgh, of rapid price growth.
Is it a wobble? Maybe, yes. The property market is certainly due a wobble in the usual 18 year cycle and it makes sense to have a wobble around Brexit.
The table below is the Hometrack price report on the UK’s cities. First of all it shows that both Edinburgh and Glasgow have respectively had 7.4% and 5.3% price growth in the last 12 months. It also shows that London prices have dropped by 0.4% in the same time period.
Interestingly, figures just released from Nationwide show last month’s UK property prices to be slightly up on October’s values. Please see here to read in more detail. The article explains that there is still healthy activity in the property market, and that Brexit fears are not putting everyone off buying.
UK property is regional
The drop in London values has led many people to believe we’re heading for an inevitable downward slide in property values across the whole of the UK. However, I cannot stress enough that the UK property market is no longer dictated to by London or the SE England. It is regional. What happens in London does not have to happen in the rest of the UK.
What happened in the past, e.g. the pre 2008 property boom which spread across the land, has not been repeated this time around. This is heavily evidenced by the fact that London prices have risen by 63% over the last 10 years, whilst many areas in Scotland are still below 2008 values.
In summary, the UK property market is slowing down and in some parts there has been a slip in values. However, there are many parts of the UK where the property market has stayed relatively strong.
Portolio’s investors are still buying
Any talk of a downturn or nervous investors doesn’t match the mood in my business. Of course we’re small, and selling tenanted property is a niche in the world of property BUT the fact is we have multiple enquiries from property investors every day.
These are property investors who want property now, not after Brexit. We’re set to have our best month ever with lots of investors taking ownership of their ready rental property before Christmas.
Should you invest in Scottish property before Brexit?
The question is; if I buy a property now, will it drop in value after Brexit? Of course we can’t be sure. There is so much information regarding Brexit (deal or no deal) that it’s hard to predict how the economy as a whole will adjust.
Thankfully, I’m only commenting on Scottish residential property! Again, for the most part, property prices haven’t gone too high in Scotland and largely, what increases there have been, have been based on improved fundamentals i.e. local investment. I know it’s hard for many first time buyers in some parts of Scotland but overall affordability is still at a reasonable level.
It’s for these reasons that I don’t expect there to be a property crash. Maybe it will become a normalised (modest growth) market but, in any case, my advice to property investors is always to play a long game. The fact is that there is still a shortage of property in the UK and the simple laws of supply and demand will keep property values buoyant.
My advice to you and other property investors, maybe with an extra element of caution, is to continue to invest in property, and do so even in the months leading up to Brexit. Even more then before, it’s all about getting the right property, for the right price.
Written by Chris Wood, MD & Founder of Portolio
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