We now enter a period of hiatus until formal exit of the EU is triggered by Article 50 which we now know will not be until October following the election of the new leader of the conservative party. Until then we will have nothing but speculation about the terms of the EU exit and it is likely to be the middle of next year before the post-leave UK property market can be viewed with any clarity. However, it seems probable that the current low interest rate environment will continue to support the economy through the transitionary period.
For cash and low-geared purchasers the next 6-9 months represents a buying opportunity. Buyers with higher funding requirements may suffer from more punitive LTV and repayment terms as funders become more risk-averse. This will reduce competition for quality stock.
In the longer term rental and capital growth for the key sectors will be determined by the state of the general economy during the transitionary period and beyond. If we do enter a near-term technical recession, economic fundamentals will impact on demand for property and, consequently, rental growth. We see industrial as being most at risk from a recession.
However, it would be wrong to apply blanket advise across the whole market. Investment opportunities will exist in all sectors throughout this period and each must be judged on its merits. The need for detailed, qualitative research to support individual buy or sell decisions remains paramount. When the economy declines the investment market does not stop – it changes to reflect the new conditions. It is vital that any purchase decision is based on the new paradigm with full knowledge of the risks and rewards over the investment period.
