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In 2016 the British public will be asked to vote on whether the UK should leave the European Union; every analyst, professional and anyone with access to social media has been speculating as to the outcome and its impact.
There are many persuading arguments for both sides but in terms of the UK property market we can split the split the impact into short, medium and long term. Uncertainty is never a good thing for investments – a great example of this was the lead up to the 2015 election. Eugene O’Sullivan, a surveyor and director at Morgan Pryce, said: “During the 5 months running up to the May election we saw a drop of in transactions by 22%, the market slowed right down with landlords and occupiers unwilling to make decisions. Once the election was over it took a few weeks but we quickly regained transaction volume pre 2015.” It looks like the short term impact will be damaging.
It has been widely forecast the medium term impact of Brexit would have a negative impact on the property market partly to the cost of leaving the EU; it was suggested GDP could drop by as much as 14% and office values could fall by 25-30%, however there are contradicting opinions. It is argued it will take circa 2 years before the UK has truly left the EU and during this intermediary period there will be uncertainty in the market, negatively impacting investment and the strength of the Pound, there may be higher taxes on foreign capital discouraging investment. On the flip side it has been argued a weaker Pound would encourage investment in the UK as our property will seem good value. Your view on medium term impact will likely be determined by the amount of arguments you for each side.
A view shared amongst most analysts is that Brexit will have a positive long term impact; the UK has and always will be a global business hub, a country that can support itself and stand on its own two feet. With new trade alliances, better control of our laws, boarders and the fact that our forecast for growth is rated considerably higher than the rest Europe leads me to believe Britain exiting the EU is the right thing to do. The issue today is many of the potential benefits are intangible or unrecognized by the general public – are we brave enough to risk what we already have and take a step into the unknown in pursuit of a better Britain? Sadly, I think not.
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.