The decision to leave the European Union the “Brexit” vote is certainly not in its infancy anymore, the vote took place well over a year ago now, and on the surface we still seem to be no further forward with the exit strategy then when we first started, which is not helping the UK economy one iota.
Article 50 was implemented in May 2017 – Both sides outlined what they expected from the negotiations, and the fact that they are all grown-ups and seasoned politicians it shouldn’t be that hard.
When we look at the draft that was put forward as the framework of the negotiations it all looks frightenly simple to come to an amicable arrangement:
The draft sets out two Core Principles:
“1. The European Council will continue to base itself on the principles set out in the statement of Heads of State or Government and of the Presidents of the European Council and the European Commission on 29 June 2016. It reiterates its wish to have the United Kingdom as a close partner in the future. It further reiterates that any agreement with the United Kingdom will have to be based on a balance of rights and obligations, and ensure a level-playing field. Preserving the integrity of the European Single Market excludes participation based on a sector-by-sector approach. A non-member of the Union, that does not live up to the same obligations as a member, cannot have the same rights and enjoy the same benefits as a member. In this context, the European Council welcomes the recognition by the British Government that the four freedoms of the Single Market are indivisible and that there can be no “cherry picking”. ”
“2. Negotiations under Article 50 TEU (Treaty on European Union) will be conducted as a single package. In accordance with the principle that nothing is agreed until everything is agreed, individual items cannot be settled separately. The Union will approach the negotiations with unified positions, and will engage with the United Kingdom exclusively through the channels set out in these guidelines and in the negotiating directives. So as not to undercut the position of the Union, there will be no separate negotiations between individual Member States and the United Kingdom on matters pertaining to the withdrawal of the United Kingdom from the Union.”
It seems that the ongoing negotiations with Europe Union are somewhat of a boxing match and clearly Europe is well ahead on points, as we enter the fifth round of the talks.
The latest round of negotiations has been called a stalemate leading some conservative party members calling for the Prime Minister to walk away from the talk’s altogether.
Theresa May has told the EU that “the ball is in your court” as they have not come forward with a counter proposal to the one the PM put forward in her keynote speech last month.
Some headway needs to be made and made soon as Brexit has already affected the British economy negatively and this may worsen if negotiations can’t be moved forward at a reasonable pace.
According to the European parliament, “For the moment, it appears that the two sides have different views on the sequencing and scope of the negotiations, and notably the cross-over between the withdrawal agreement and the structure of future relations, and this divergence itself may be one of the first major challenges to overcome.”
One key event that will play a pivotal role in this round of negotiations is the Business Advisory Council session taking place to reassure business leaders that the Brexit process is on track.
Companies including Aston Martin, HSBC, Morgan Stanley and Vodafone will be just some of the companies at the talks which follows warnings from RBS chairman Sir Howard Davies that the damage to the City from Brexit is “going to be quite considerable over time”
Brexit: The effect of the UK economy
If we cast our minds back to when article 50 was first initiated back in May we saw a drop in value of the Sterling and a spike in inflation, but nothing too horrendous compared what we have seen in the past.
The drop in sterling actual helped the UK property market as we saw many overseas investors taking advantage of the weaker pound to snap up some bargain property investments.
This is a long way from when many of the open-ended property funds were forced to cease trading as they struggled to find the capital to pay back investors who wanted to withdraw their funds because of the uncertainty surrounding the Brexit vote.
The heart of London property market never skipped a beat as foreign investment continued to flow with investments in commercial property, student housing, property funds rising to new highs.
The rest of the UK property market weathered the initial storm nicely and bounced back to give the London a run for its money and prove the UK property market is not a one trick pony when it comes to investment opportunities.
This trend has continued nicely, although London property prices may have seen a slight decline, other regions have taken up the slack with the likes of Manchester and Birmingham showing strong capital growth and good rental yields, and Luton town cementing itself as the buy to let capital of the UK.
There are many different opinions on how the UK property market is going to fare over the next 12 months, especially with the outcome of the Brexit negotiations still uncertain.
One thing is for sure though and that is will still have a chronic shortage of housing in the UK property market, so no matter what happens more property development needs to get underway and fast to have even the slightest of chance of keeping up with the ever increasing demand, and this leads me onto my next point nicely:
Brexit: The UK property market and consumer confidence:
What are the current implications of ongoing Brexit negotiations on UK property.
Consumer confidence is still high and Brexit is having little impact.
71% of UK property purchases say Brexit is not a factor.
Brian Murphy, Head of Lending for Mortgage Advice Bureau, the company which carried out the research, said: “The fact that 71 per cent of those planning a home move did not see Brexit as an influencing factor in their decision making process is perhaps surprising news for those who may want to paint a pessimistic picture of the current UK housing market.
“In fact, this report should be regarded as a reality check and a reminder of the fact that, for most, a home move is driven primarily by personal circumstances rather than economics or politics, something that’s clearly evidenced by our research, with almost two thirds of respondents highlighting changes in lifestyle as the key factors driving their decision to move home.”
30 per cent of UK property owners are expecting a drop in property prices during the next 12 months and 29 per cent expect to see them to rise as a result of the UK leaving the European Union.
“Overall, the poll gives us valuable insight into consumer sentiment and would indicate that homeowners who are motivated to move are not being swayed by the political negotiations, with consumer confidence in property seemingly still high.”
UK property prices are house prices are slightly slower pace than the last few months.
Annual house price growth was at 2.1 per cent in August.
UK property prices are still holding at 10 per cent above the 2007 peak.
So Brexit has little to no effect on consumer confidence, UK property prices are hovering at above the 2007 peak making UK property a sound investment, and with demand far out stripping supply this should not change any time soon.
It would be nice if those involved in the Brexit negotiations could hurry things along so we all know where we stand but at the moment things don’t seem to dire for the UK economy or the UK property market, how this will change in the future is anyone’s guess and until the talks are finished no one really knows.
But, right now things are as well as can be expected and I see only good reasons to get involved with the UK property market as far as making an investment with no real solid facts to the contrary.
Throw in the fact that savers are getting such a raw deal with interest rates this furthers the UK property investments cause.
Property investment in the UK has been a way to make reliable, solid and consistent investments returns long before I was born and I believe that will be the case long after I am dead, political and economical climates will always play a part but they do not have the last say on whether money can be made in this arena or not.
Like all investments you need to know what you are doing, get in and get out at the right time and have realistic expectations, as with most things in life if it sounds too good to be true it usually is.
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