Brexit Proof Cities: How The Brexit Decision Will Affect UK Property

What do the experts say?

As much as we can look at trends, forecasts and regeneration news, there’s no doubt Brexit is set to dominate the UK property market headlines over the next few months. At SevenCapital, we’ve decided to tackle the subject head-on and speak with the industry experts on the front lines including developers, estate agents, letting agents and property specialists. By gathering a wide range of opinions on Brexit and the effects it’ll have on UK property over the next few years, we want to get a comprehensive view of how the industry is reacting to one of the biggest political events in a generation.

John Wilson, Founder, PropertyInvestmentBlueprint.com

“Legendary investor Warren Buffet once said, “Be fearful when others are greedy and be greedy when others are fearful”, and I think this applies perfectly to the current Brexit situation. This – in conjunction with the climate created by the new Section 24 tax relief legislation – will create a once in a lifetime investing break for savvy investors who have the knowledge and the resources to take advantage of the opportunity presented by those wanting to get out of the market.”

Commenting on how Brexit will affect the UK rental market, James Davis, CEO of online lettings agency, Upad, said:

“If there’s one thing that IS certain around Brexit, it’s that it’s causing almost unprecedented levels of uncertainty.  This is something that always affects the property market and whilst the exact way our exit from the EU plays out remains to be seen, what is clear is that anyone who doesn’t need to sell a property right now, is holding off until some level of clarity is achieved.

“This has created a sales market which today is in shutdown, but it’s a situation that signals huge opportunity for those in the rental market.  Simply, potential purchasers who have decided to hold fire, for the time being, are opting to rent as a stop gap whilst those who have managed to sell already are renting in order to position themselves as effectively a ‘cash buyer’ when the right property comes along.

“All that said, for anyone, not least of all property investors looking to enter the Buy To Let market and take advantage of the current buoyancy in the rental market, property does remain a popular asset class over the longer term and so now, may in fact, prove an ideal time to make that investment purchase.”

According to Zoopla data, Birmingham and Manchester are leading the way for growth post-Brexit, with these cities outperforming the rest of the UK by seeing property prices boom by more than 15% since EU referendum. Birmingham has seen the highest growth with 16% since June 2016, closely followed by Manchester with 15%.

This is a sharp contrast from the southern cities such as Oxford, London and Cambridge, which demonstrated excellent growth post-recession but has severely slowed since the Brexit vote. The HomeTrack report reinforces this renewed success in the North:

“It is clear from the transactional data that households are continuing to buy property at a steady rate and the impetus for growth in both activity and prices is focused in regional housing markets.”

Generally, while house price growth has been slower across the UK, this is mostly down to more stagnant prices in London and other cities in the South East. Regional cores are the exception to the rule, experiencing incredibly quick growth thanks to fantastic inwards investment and more affordability within the market.

Top 3 Cities Performing and Where To Potentially Capitalise

Birmingham +16%

With the market slowing in the South, Birmingham has seen the highest price growth post-Brexit at 156%, topping all other UK regions. The second city has the largest business, professional and financial services hub outside of London, attracting huge corporations such as HSBC, Deutsche Bank and PwC, making the city a truly commercial hotspot. This has only supported growing demand for living in the city, with contemporary apartments in areas such as the Jewellery Quarter, Harborne and the city centre providing excellent rental yields, between 5% and 10% on average.

Thanks to incredible inwards investments and huge infrastructural developments, Birmingham is forecasting growth of 14% over the next three years and will remain an investment hotspot throughout 2019.

Manchester +15%

The heart of the Northern Powerhouse continues to impress, supported by an incredibly strong rental market and student population. On track to experience a 14% population growth over the next 20 years, Manchester has harnessed the influx of young professionals to drive supply and demand for more rental properties. With significant investment bolstering its credentials, Manchester remains a consistent performer alongside Birmingham and Liverpool in the UK’s top areas for rental growth.

Leicester +15%

Most recently the East Midlands city of Leicester has seen the most positive growth over the last 12 months topping the HomeTrack charts almost every month for growth. Considered the third and final ‘Greater City’ of the Midlands, Leicester saw property prices increase during 2017 and 2018 alongside a huge imbalance between supply and demand creating a highly competitive market. With property price increases of over 250% since 2000, Leicester is continuing to rise as a major investment hotspot.

What’s your opinion?