The humble marmite was subject to a huge controversy last week. Apparently, the plunging pound forced a standoff between Unilever and TESCO – while the latter wanted a 10% increase on prices of its products to compensate. The feud played on national media; depending on which newspapers you preferred; you either refused to forgo Marmite for the ‘sake of freedom’, or wore a smug ‘I-told-you-so’ look. Meanwhile, folks across the pond wondered, why do Britons freak out over a disgusting black spread! Well, that’s a story for another day. But the general consensus is an indicator of things to come. So how will Brexit impact the real estate market in the UK? Here are our two cents:
Singapore’s United Overseas Bank temporarily froze mortgage loans for London properties. This was followed by other banks warning investors about potential investment risks. Property deals were either momentarily postponed or halted indefinitely. Everyone was taking a pause waiting for the dust to settle. LSL Property Services, Britain’s second biggest estate agent reported business to be the lowest in four years.
Sales was erratic, i.e. in some areas, sales was held up because of a combination of factors like low mortgage rates, better chances of buying a house, etc. In other places, property experts expected a freeze in new building because of the slump in prices. Here again, predictions varied depending on which side of the campaign you belonged to – those in favour of the Remain vote predicted an 18% drop in house prices. And those in favour of Brexit, said this was a strategy unleashed by Project Fear.
Real estate has experienced a growth, claim many reports, including one from CNBC. Britain, especially London has been a favourite of foreign investors (Middle East Arabs, Russian oligarchs, Chinese, etc.) The slide in the Sterling rates has attracted people looking for a rare opportunity to buy properties at a discount. The currency movement has certainly helped to keep things bright in the real estate market. However, rental prices have fallen by around 0.8% from August. But this could hardly be attributed to Brexit. This could probably be due to the rise in the number of properties being registered before the stamp duty increase set for April next year.
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