On Wednesday, the Prime Minister triggered Article 50 of the Lisbon Treaty, officially starting the process of the UK leaving the EU. Over the next 2 years, the negotiations will undoubtedly affect property prices across the UK, particularly in London.
The triggering of Article 50 puts an end to the period of uncertainty in the property market caused by the result of the referendum result on 26th June last year. Finally the government has given investors and buyers the confidence that Britain will be leaving the EU in 2 years time, now it’s just the small matter of negotiating the deal.
Whilst stability should now return to the property market, the extent and swiftness of it’s return will be largely determined by the speed and success of the negotiations – as each of the items on Teresa May’s “to do list” are ticked off, so stability will increase. As the deal takes shape and the uncertainty diminishes, buyers will feel more confident in getting on with their lives, and sellers will feel more confident asking higher prices.
Having said that, Londoners are likely to remain more cautious than elsewhere, given that London had been enjoying a property price boom. The Brexit vote slowed down that growth to it’s lowest level since 2013, and experts believe that over the next few years the growth rate will flat-line at around the 5-6% mark.
The weakened pound has also provided overseas investors and buyers looking to relocate to the capital with an opportunity to get a better deal.
Whilst year on year the number of properties being sold in London is down by around 20%, the demand for property in London continues to outstrip supply, ensuring that the market here will remain largely protected from any negative impact from Brexit.
Ultimately then, the impact of Brexit on London’s property market comes down to the final deal, and what impact it will have on the wider economy – on jobs, immigration, inflation, interest rates and the value of the pound.