Property Investors in UK Make Their Move as Pound Falls Sharply

Property Investors in UK Make Their Move as Pound Falls Sharply

UK property investment just got even more affordable for overseas investors, as the pound dropped to a 28-month low against the dollar following the renewed possibility of a no-deal Brexit. Find out what this means for you – and why now is a good time to invest.

 

Summary:

  • Sterling dropped to a 28-month low against the dollar on Monday (29th July 2019), with experts stating more falls could be on their way
  • It came as the new UK government, led by Boris Johnson, made it clear that they are actively preparing the UK to leave the European Union on October 31st without a deal if new negotiations fail
  • Property prices in the UK are now significantly more affordable for overseas investors, with rising demand from buyers in the United Arab Emirates, Hong Kong and China

Is this now an unmissable opportunity for overseas property investors to make a property investment in the UK?

On Monday (29th July), the pound fell to a 28-month low against the US dollar. It dipped 1.1% to $1.2242.

It’s now also at a two-year low against the euro, currently standing at EUR 1.08896 at the time of publication.

This latest reduction came as the new UK government announced that it’s taking steps to prepare the country for the possibility of leaving the European Union (EU) without a deal on October 31st.

New Prime Minister, Boris Johnson, had declared his desire to take the UK out of the EU on the current Brexit deadline, whether a new agreement could be reached or not. In the first few days since taking office, those earlier declarations have been stepped up, with former environment secretary Michael Gove now responsible for no-deal Brexit preparations.

With uncertainty around what an immediate cutting of ties between the UK and the EU would mean, speculation has prompted the pound to make this new reduction against the greenback, continuing a long period of losses ever since the EU referendum in 2016.

And this has prompted investors from around the world to take action.

The table below, published in the Telegraph by mortgage lender Skipton International, shows that since the start of 2019, investors in the United Arab Emirates have made the most inquiries to acquire a mortgage to buy UK property.

table from article

Brexit, and even the possibility of a no-deal Brexit, is encouraging global investors to move into the market.

Of course, when the UK leaves the EU there is expected to be a level of stock market volatility in the short-term. A no-deal Brexit would add further complexities to this new working relationship, hence the stepping up of preparations by the UK government.

But this uncertainty should only be for a short period of time. Once the UK has left, over time there should be a gradual increase in clarity, as analysts are able to more accurately predict what this change means for the UK’s economy.

International property investors trust the UK for its strength and stability; Brexit shouldn’t tarnish this reputation in the long-term.

They’re also aware of the huge undersupply of property in the UK. Right now, housing delivery in the UK needs to rise by 25% just to meet the government’s target of 300,000 new homes each year by mid-2020. This is driving yields and growth for investors and leaving the EU will not reduce this level of demand for real estate in the UK.

The fall in the pound has ramped up investor activity in recent months.

pound v dollar since eu ref

To date, Brexit had made property investment in the UK more affordable for overseas buyers. The pound is now 22% lower against the US dollar compared to the 23rd June 2016, the day of the EU referendum.

International investors are now getting considerably more for their money when buying UK property.

CURRENCY TABLE

This, undoubtedly, is making UK property an investment opportunity many international investors feel they cannot afford to miss.

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