Britain Leaves the EU- July Newsletter
Britain Leaves the EU- July Newsletter
Welcome to Surelock Network Auctions’ July Newsletter! What a month June turned out to be! It was always going to be a close vote but the impact of Brexit was likely much bigger than many expected – ourselves included. So much has happened in the almost two weeks since Britain voted to leave the European Union and we’ve got some thoughts on it all to share with you.
Avoid the Return of Gazundering at Your Local Property Auction
Figures from estate agency Haart show there was an 11% increase in the number of buyers that pulled out of agreed sales in the final weekend of June compared with the final weekend in May. That’s a sharp increase and ensures there’s no avoiding the impact Brexit has had on the financial markets, confidence and the UK’s property market.
But, by putting your property up for sale or planning to make your next purchase at a property auction means you can avoid buyers pulling out after agreeing a price and booking surveyors. As well as the clear and transparent bidding process that takes place at auction, both parties sign and exchange contracts on sale day. We think that despite the loss of confidence and evidence of buyers requesting price reductions post-Brexit, property auctions could well experience an increase in business in the second half of the year.
Property buyers and sellers, whether it’s for a home or investment purposes, all want some certainty and an auction room offers that and much more.
Interest in UK Property from Foreign Investors Expected to Rise on a Weaker Pound
The value of the pound tanked after the vote for Brexit and it hasn’t shown any real signs of a significant recovery since. At the time of writing it was hovering around the $1.31 level – more than 10% lower than the $1.50 it hit before the result of the EU referendum was confirmed.
Although a weak pound is bad news for Britons who wish to travel abroad as they will get less foreign currency for their pounds, it could work to entice foreign property investors back into the UK. While there was widespread news of delayed deals ahead of the referendum and overseas investors requesting so-called Brexit clauses into contracts allowing them to leave a deal if the UK voted to leave the EU, the weak pound and a possible drop in UK house prices will likely encourage a number of investors to return to the market.
Of course, UK and particularly London property could never be described as a bargain. However, if savvy investors are sensible they can take advantage of the double hit of lower UK house prices due to a drop in sentiment and the greater buying power their foreign currency currently has in the UK.
How Low Can UK Interest Rates Go?
Bank of England Governor Mark Carney has spoken to calm the markets and reassure businesses and consumers in Britain. He has spoken of the BOE’s planning and readiness to take any necessary action that’s within its power to help stabilise the economy if it flounders.
Mr. Carney also suggested that interest rates will be cut over the summer. However, it’s likely that 0.25% is as low as the UK’s central bank might be willing to go, for fear of doing more harm than good across the broader financial market and economy.
“It’s extremely important that any monetary action, whatever it would be, is well aimed, that it focuses on the domestic economy, that it takes into account potentially unintended, or counterproductive, if you will, offsetting consequences in the financial sector,” Mr. Carney said on Tuesday.
In the meantime, borrowing and mortgage rates should remain at the low levels they’ve been at for some time. They could even sink further in order to encourage more lending and spending to support an economy that is, according to a large number of economists and experts, to be in real danger of contracting before the year is out.
We hope you enjoyed Surelock Network Auctions’ thoughts on the issues discussed in our July newsletter. If you want to keep up-to-date with Surelock’s auction dates visit our website and to keep abreast of our news and views, take a look at the blog section.
We welcome any comments on the points we have mentioned, or any questions at all, even about a property you are interested in that isn’t listed at one of our auctions. Additionally, if you want to share your own views on another topic, please contact us. You can get in touch by responding to this email, tweeting us @KhalidAuctions or commenting on the blog section of the Surelock Network Auctions website.