Brexit causes surge in property sales
Property has been one of the first markets to take a hit from the UK’s surprise Brexit decision. However, contrary to fears, property sales in London have actually jumped almost 40% in the week following Brexit.
A slide in the British pound and the panic over the weekend following the Brexit results, attracted bargain hunters from across the globe, resulting in sales increasing 38% compared to the previous week, according to data from Knight Frank.
The UK real estate brokerage said that sales increased 29% in the immediate aftermath. Millionaires from the Middle East, Russia and Asia took advantage of the weak pound to sweep up more penthouses and townhouses in the city.
Investors using the dollar had a particular advantage when the pound dropped 15% against the American currency.
Although currency opportunity has played a big part in the boost of property sales, experts have also claimed that the lift in sales was in partly due to sellers who lowered prices both before and after the Brexit vote. Weaker price of growth, together with rising economic and market uncertainty surrounding the European vote, has prompted vendors to reduce asking price over recent months.
Stockbroker finnCap predicts that a fall of up to 20% of property prices could be on the cards in London over the next year. Property prices in the capital have already seen a fall of 0.2% in June and rents fell by 3% according to Knight Frank.
Here is Knight Frank’s visualization of price changes in central London from the start of the year to June:
However, although the drop in property prices in the capital are worrying, finnCap doesn’t not think we will see a repeat of the 2007 financial crisis, and predicts that prices will start to pick up once the market is more stable
The surge in property sales is not expected to last the summer as the FTSE 100 bounces back and the pound begins to recover.
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Written by: The Team | On: July 11, 2016