Following the recent decision of the United Kingdom to leave the European Union and the announcement of resignation by Prime Minister David Cameron, the talk of the town is how Britain’s exit from the European Union will affect the United Kingdom’s real estate market.
The UK is likely to see a short period of stunned disbelief followed by market adjustment and falling prices as potential investors will gradually slow down their investment in the United Kingdom until plans for an orderly exit are settled; hopefully then followed by an increase.
Gráinne Gilmore, head of UK residential research at International Real Estate Consultants Knight Frank, believes that the United Kingdom may initially see a market drop as consumer confidence will be knocked. He is quoted saying that “This may weigh on activity, which could result in a slip in transaction volumes, and prices.”
The decision to leave has opened up a Pandora’s box as far as the London property market is concerned and for overseas buyers, this big and dramatic drop in the value of Sterling will effectively offset the Stamp Duty and tax adjustments and it will make prime London property a lucrative investment for overseas investors bold enough to make a decision to buy despite the market uncertainty, according to Peter Wetherell, chief executive of Wetherell.
Head of residential research at JLL, Adam Challis, said that “Paradoxically, investors may well identify opportunities in this market over the short term, particularly international purchasers that can benefit from the currency arbitrage that has opened up by a weaker Pound Sterling”.
Property investment is considered as a long-term investment as opposed to a rather than short term investment. Opportunities are up for grabs for Nigerians who are desirous to investment in the UK to take advantage of the dropping prices and a weaker pound. This in return will compensate for the loss in the value of the Naira as most Nigerians spend a large proportion of their FX expenditure in the UK. Nigerians will save some money from the lower valued Sterling.