The real estate market in the UK waiting for Brexit

The cost of apartments and homes in the UK could fall to 10% and then to rise to 18% due to the economic shock that can overtake the country if the British citizens will vote for a British exit from the European Union.

George Osborne, speaking at a meeting of G7 Finance Ministers, held in Japan, expressed fears that a possible British exit from the European Union has a negative impact on the financial position of British families and businesses, including the real estate market.

Independent experts, including the international Monetary Fund is concerned that if Britain leaves the EU, a consequence of financial instability will increase interest rates on mortgage loans, and that means even fewer people will be able to buy a house in the UK with the involvement of mortgage lending.

About the negative impact of Brexit warn independent Agency Virgin Money’s Chief Executive, CEBR, S&P, Fitch and Deutsche Bank.

The Chancellor of United Kingdom George Osborne also expressed a doubt that building a new relationship with the European Union can be a long and bureaucratic process that requires a lot of effort and money. According to the Chancellor, the country in the event of withdrawal from the European Union, immediately will cover the economic shock, people will face economic uncertainty and in the end, and the country and people will become poorer.

With the approaching date of the vote, BREXIT Agency of real estate of England report that more and more buyers took a break until the date of the outcome of the vote, and many investors entering the property transaction, include in the contract a clause according to which they shall be entitled to terminate the contract if the UK leaves the EU.

A study conducted by CBRE shows that 73% of investors think that the attractiveness of the British property will be reduced if the UK will leave the EU. Only 7% of the surveyed investors think that the attractiveness of the UK property will not change. About 14 billion of investment in commercial property in the UK was invested for 1 quarter of 2016. This is 21% less than in the same period of 2015. Early indicators show that the decline in investment in UK property can reach 30% per year. Despite the fact that investors rely on a number of factors when making decisions, including on global economic situation, now is the uncertainty due to BREXIT is the only obstacle that affects the decision of investors in property in London and other British cities.

® Helen Entree. 16.05.2016

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