Brexit and the property market: June 2020 update
Buyers and sellers would do well not to take their eye off the ball in relation to the latest Brexit developments, says Tom Bill
2 minutes to read
What is happening with Brexit?
It has been easy to lose sight of the latest Brexit developments in recent months.
However, beneath the headlines that often do little more than relay a particular negotiating position, there appears to be a consensus building that some kind of deal will happen.
Or, at the very least, that the no-deal Brexit that has caused property and financial markets to take fright in recent years, appears less likely.
In February, Toscafund chief economist Savvas Savouri said: “Brexit will be performed in the best interests of all across the EU, the Remaining 27 and the Leaving One.” Since the pandemic, he believes there is an even greater focus on economic self-interest, making the statement more relevant today.
An article in Prospect magazine this week, better known for its calm analysis than eye-catching headlines, suggested that a Brexit deal was coming into focus. Read it here.
Yesterday, Bloomberg reported that a deal between the UK and EU that avoids a no-deal cliff edge is the base case for a majority of economists polled. Story here.
“EU and U.K. leaders recognize that the last thing anyone needs right now is a disruptive no-deal Brexit,’ said Simon Harvey, a currency market analyst at Monex Europe Ltd. “Even if it’s just a bare-bones deal that avoids large scale goods tariffs going up, some type of agreement is likely to get inked this year.”
What does that mean for property markets?
First, the prospect of a no-deal Brexit has been one of the causes of pent-up demand in property markets in recent years. There will always be multiple and shifting risks and opportunities that buyers and sellers weigh up, but if this particular risk starts receding, it is something to factor in.
Second, the avoidance of a no-deal Brexit, if confirmed, would result in a stronger pound. With Covid-19 in the background, it’s unclear by how much it would rise. However, this is something that should be on the radar of international buyers.