Brexit: Expert explains why UK won’t rejoin EU
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After the UK voted to leave the EU, there were fears of a long-term mass exodus from the international property market. While the property market did see a decline after a peak in 2017, London’s international market has started to show signs of recovery. This comes after three consecutive years of declining market activity.
International transactions in the capital have increased by 0.6 percent since last year.
The market value of these purchases also increased by 4.8 percent in the same period, to nearly £11.4billion.
Geoff Garrett, the director of debt advisory firm Henry Dannell, said that the uptick in international buyers has been caused by “the fact that the political dust has now settled following Brexit”, combined with the “easing of pandemic travel restrictions”.
The 2017 peak saw international buyers account for 31,693 property purchases in London, according to CityAM.
The market value of these purchases was the highest seen in a single year over the course of the last decade, sitting at £15.2bn.
This was 24.3 percent higher than the previous year.
But in 2018, foreign buyer transaction levels fell by 0.7 per cent, before plummeting by 26 per cent in 2019.
This came as new Stamp Duty Land Tax (SDLT) rules for overseas buyers were announced.
Uncertainty surrounding the finalisation of the Brexit process also contributed to this downturn.
In 2020, international property purchases dropped by a further 3.6 per cent as pandemic put a stop to international travel, preventing most international buyers from entering the market.
Speaking to CityAM, Mr Garrett said: “Having peaked in 2017, a myriad of factors have led to a decline in international buyer interest within the London property market.
“As a result, both the proportion of transactions and the total market value of homes purchased by foreign buyers has been on the slide.
“The tide certainly seems to be turning and the initial green shoots of a recovery across this segment of the market appear to have sprung in 2021.
“This has undoubtedly been driven by the easing of pandemic travel restrictions and the fact that the political dust has now settled following Brexit.”
Looking at the data over the last year, Mr Garrett said: “We expect this recovery to continue over the coming year and with many foreign buyers already securing financial support within their native countries, often at much higher rates of interest compared to the UK, we don’t foresee increasing interest rates to act as a deterrent to the same degree as it will across the domestic market.”
Speaking about the impact of Brexit on the UK property market, property finance brokerage Articus explained: “There was certainly a period of uncertainty where we saw potential investors holding off from making decisions, as they waited to see how the dust of Brexit would settle in the time between the vote and leaving Europe.
“What we didn’t see, however, was a major crash. And now, two years on from leaving, we’ve witnessed the opposite.
“Since the UK left the EU, prices have ‘had a huge boom’ with the growth being spread fairly evenly across the country.
“Last year marked the first time average UK property price has surpassed £250,000.”
The firm noted that, despite predictions of “chaos” post-Brexit, the property market is now “looking as resilient as ever – even throwing a global pandemic into the mix.”
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