The referendum results have thrown a curveball at the UK’s economy and investors alike. Chances are, however, there’s a winner to come out of this change: the North’s property market.
In its monthly house price index, lender Nationwide named England’s North as the area with the lowest house prices as of recent. For the UK as a whole, prices increased from 4.7% one month ago to 5.1% more recently.
Nationwide’s chief economist Robert Gardner said: “Ultimately conditions in the housing market will be determined by conditions in the wider economy, especially the labour market.”
“It is too early to assess the impact of the referendum vote on the economy.”
The report also said that the divide between the north and the south continues to grow, with the gap at the moment sitting at £169,000, according to the Nationwide figures. This figure is £24,000 higher than one year ago.
So why could the Brexit decision be a win for the North? For three reasons.
1. London’s Uncertainty
Undoubtedly has the referendum result and any repercussions following that decision hit the London market the hardest.
As a response to this uncertainty, UOB, one of Singapore’s largest lenders, has suspended its loan programme for London properties, not mentioning any other part of the country.
In a statement to the BBC the Bank explained: We will temporarily stop receiving foreign property loan applications for London properties.”
“As the aftermath of the UK referendum is still unfolding and given the uncertainties, we need to ensure our customers are cautious with their London property investments.”
Singaporeans were named as the top Asian buyer of UK commercial property in 2015, according to a Knight Frank study. With UOB’s latest statement, some savvy investors who still believe in the British property market might start looking elsewhere in the country.
2. London Regulation For Foreign Investors
Sadiq Khan, London’s recently elected mayor, has made his mark early by making some big statements about regulating foreign access to the capital’s property market. According to a report by Invezz, the mayor plans to introduce restrictions on property sales in London in order to prevent the city from becoming the money laundering capital of the world.
His new rules will be aimed at overseas investors and will limit the amount of homes investors can buy and then possibly leave empty. This move is forecast to find a good amount of support from housing campaigners across the city.
The mayor’s decision to go down that road also means investors might start to take a bigger interest in the UK’s second city, Manchester, which has already seen a massive investment from China of £2.1bn since 2012.
3. For Brexit To Work We Need Decentralisation
After the vote and with the results asking the UK to leave the EU, the country will need more than one metropolis to rely on. For the country to continue functioning as the achieving nation it is, it needs a second, third and fourth force behind London.
The Chancellor’s plans to establish the Northern Powerhouse as an economic force to rival that of London might now come in more handy than ever before. And Manchester at its centre has already earned its stripes by gaining more and more investment over the last couple of years and having a rising number of people choosing to move to the capital of the north.
The other incentive the North has to offer for investors? Low cost, high yield (some doubling London’s average 4% yields) property, including a shortfall in appropriate accommodation in Manchester of 22,000 units by the end of this year.
Especially with lenders tightening their rules on mortgages, England’s North offers investors what the South and London in particular have been lacking for a while now: affordable property in a sought after location.
