There is a great deal of panicking going on at present fuelled by the media and the lack of direction and leadership being shown by our politicians. People are scared of change and that fear itself causes most of the volatility we are now seeing in the financial markets. It’s a self-fulfilling phenomenon.
It will no doubt take a while – a few weeks, or maybe longer – for everything to settle down, for people to realise the world isn’t about to end, and things to revert to more normal conditions.
As far as property investing goes – the truth is, no one really knows what’s going to happen to the property market following Brexit.
Uncertainty is, ironically, all that we can be certain of. In the immediate term, this uncertainty may well lead to decelerating house price growth and may cause investors to hold off until things have settled down, but for how long and to what extent remains to be seen.
Brexit & House Prices
I can understand why the London market may be badly affected, as it has a large number of overseas citizens living there, who may leave, but that is a lot less relevant to the North West.
What we do know is that Manchester’s residential housing market has climbed from strength to strength in recent years. The city sits at the heart of the Northern Powerhouse and is in receipt of ongoing investment in infrastructure. The uncertainty surrounding Brexit may cause a brief slowdown in rising house prices and foreign investment, but bricks and mortar is likely to remain a sound investment. Predicted house price growth in Manchester for 2016-20 is 24.6% and rental income for the period is expected to rise by 22.8%.
With Manchester’s available housing stock having fallen by 70% since 2008, and the population having increased, it’s difficult to see how the property market would be weakened too dramatically by Brexit in the long term; the fundamentals of the property market remain the same and there will continue to be greater demand than there is supply – especially in the North West.
We therefore believe that property continues to be one of the safest and best vehicles to place your money.
It is also worth noting that we are focused on offering investments which remove the uncertainties usually faced by investors and that deliver predictable and consistent returns to our investors as far as that is possible.
It is why we now concentrate on buy to let investments with long term leases at a fixed rent and peer to peer loans that also pay a fixed return. If, as seems likely, the UK goes into recession, interest rates will probably be cut again and this makes these fixed return investments even more attractive especially for those who would otherwise have their money sitting in a bank account.
So, in conclusion, whilst the Brexit result is an sharp bump in the road, we do not believe it is something to seriously affect the long term benefits of property investing or the health of our business.