Last Friday, the British Pound experienced a freak crash just as Asian markets opened, making it possibly the worst day of trading since the EU referendum.
City A.M. talked to a couple of experts to find out what – in their opinion – will happen to the country’s property market after this impressive drop.
Nicolas Finn, executive director of Garrington Property Finders said some buyers may rush to make a decision, but only after they’ve already had a lot of time to consider.
“No-one ever buys a property based on exchange rate alone, but for many astute foreign buyers the pound’s abrupt fall this week may prove a tipping point,” Finn said.
“Demand for prime central London property slumped in the wake of the increase in stamp duty on the most expensive homes. But for overseas buyers, sterling’s weakness has now levelled the playing field – and neutralised the additional stamp duty costs.”
Rob Weaver, director of investments at property crowdfunding platform Property Partner, said the hit sterling took could affect buyers from the UK.
“It makes any further interest rate cut by the Bank of England at least this year look more unlikely, which may slightly weigh down the housing market,” said Howard Archer, chief UK economist for IHS Markit. “But any further interest rate cut would be slight, so mortgage rates would not have fallen much and non-tracker ones may not have fallen at all.
“Of course, if sterling falls sharply further and quickly, the Bank of England would even have to contemplate raising interest rates to provide some support – but I do not think we are anywhere near that point.”
Ben Madden, managing director of London estate agents Thorgills said foreign buyers are “keeping their powder dry” because sterling may fall even further.
“There’s also still a great sense of uncertainty in the British housing market post-Brexit and many foreign investor may be playing a wait and see game rather than rushing in,” Madden said.
“There’s a window of opportunity for overseas buyers…but it might make better sense for them to hold out for a few more months, or at least until next March, when properties may just become even cheaper for them thanks to the weak pound.”
Rory Penn, managing director of prime London property agency VanHan, said: “We have seen a sharp increase in interest from buyers who hold their money in US dollars, predominantly from the US, South America and Europe, looking to take advantage of the favourable currency exchange rate, and we have closed a number of these transactions.
“Coupled with the general softening of the market, these international buyers are now looking at much more attractive prices than they were before June.”
