Businesses, especially small business and startups have been suffering from uncertainty and indecision due to the Brexit vote in 2016 says Forbes. If it never happened, the UK economy would up as much as 2.5 percent (Financial Times).
Real Estate Sales Volume Down
Confidence is at an all-time low, and while the Real Estate sales sector is used to the steep highs and lows, associated with booms and busts of the property cycle, it’s an industry that is at its gloomiest in 10 years says The Guardian.
The property sales figures are at their slowest rate since July 2013 according to government data, the article says. This is a time where there is no precedent, as there has never been a Brexit, and therefore, there is no way to predict what is going to happen next.
Feast or Famine?
Real estate agents are uncharacteristically pessimistic at this time. It’s a famine so to speak of huge proportions, and the lack of uncertainty and property buyer affordability is chocking the UK Housing sector.
Strong growth in sales prices for six or more years, particularly in London and the south-east and also East Anglia and the south-west has pushed up sales prices, and now many homeowners are frankly stretched. New home buyers need to take heed of this warning.
Prospective buyers don’t want to get into risky debt level territory. This is a time where there is a higher risk to their job security, so they are shying away from taking a leap of faith in the property market until they know the Brexit outcome.
Britain’s divorce from the E.U. has been delayed and so too any news of what’s coming next for the U.K.
Real Estate Agents Can Be Optimistic
While many owner-occupier home buyers are sitting on the fence, desperate vendors lowering the price to get a sale will attract another type of buyer – property investors.
Cashed Up Property Investors
Landlords are always looking for a bargain, i.e. a rental property to add to their portfolio. It’s a time cashed up property investors will buy properties, often more than one, when they can get them, less than their expected market value.
So there is an opportunity for real state sales agents even in the tough times.
Experienced landlords have a higher appetite for risk or put another way; indebtedness, than your average home buyer, so they will be less concerned with Brexit.
Lenders to understand the investor’s mindset, and they have a lending formula for landlords. When numbers work, i.e. debt servicing and LVR loan to value ratio), the funds are made available to investors, and they go house shopping.
This is a time landlords aka investors also look for do-ups, i.e. homes that need renovating. Therefore real estate agents can if not do well, survive in the current market. They will need to work harder and smarter, but the rewards are there for the savvy agents who change tact and create a niche in the investor end of the market.