How Will The Pound Flash Crash Affect the UK Property Market?

Having surfaced from one of the most split decisions in recent history, it seems as though the United Kingdom is in a state of suspension. Brexit, GBP flash crashes, and political storms, they say that it all comes in threes. Although experts say that there is stabilisation on the horizon, we keep on hearing the same questions - what does the pound drop mean for the UK property market and why should we buy?

To no one’s surprise, along with a combination of other issues, the decision to leave the European Union created some uncertainty within the housing market. Teamed with a 31 year low for the British pound, property investors have been understandably cautious to tread in the UK housing market.

But now, according to leading financial specialists looking at similar historic crashes, there is still light on the horizon. As reported in 2013, Britain's recovery from the Great Recession of 2008 was "faster than previously thought", according to official data from The Office for National Statistics (ONS). The report showed that the UK grew more rapidly than any other G7 economy over the past two years. ONS also confirmed UK growth at 0.7pc in the second quarter of the year compared with the previous three months. As pointed out by a series of further revisions, the ONS also said the UK was 5.9pc larger than its pre-crisis size in the second quarter, from a previous estimate of 5.2pc.

This means that, if following previous trends, the UK economy and housing market is set to emerge stronger than previously thought.

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Nicholas Finn, executive director of Garrington Property Finders, explained that an Australian buyer who had been hesitating on a high-end apartment in London sealed the deal after seeing the pound plunge overnight. He moved on to say that the reason behind this was that ”no-one ever buys a property based on exchange rate alone, but for many astute foreign buyers the pound’s abrupt fall this week may prove a tipping point.”

What does this mean for property investors?

In short, this suggests that although it may be sensible to tread carefully within the market as a UK buyer, experts suggest that the near future may be the best time to invest in property as an overseas buyer, due to recent conversion rates. A survey by property adviser JLL, which represents firms such as UBS, TIAA Henderson and M&G Real Estate, found that around 72% of the investors said the weakening pound meant that UK real estate was a more attractive prospect, and 27% said they would be investing in the immediate term.

All of this information shouldn't disguise the fact that almost all of UK sectors are showing signs of risk, so it’s very much advised to carry out in-depth research into any project that is undertaken. Although, Ben Madden, Managing Director of London estate agents Thorgills, helps to reiterate that "there's a window of opportunity for overseas buyers...but it might make better sense for them to hold out for a few more months, or at least until next March, when properties may just become even cheaper for them thanks to the weak pound.”


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