Brexit effect in London

crondom

I suspect there have been many other threads like this but I thought I would get people's opinions...

My partner and I are FTBs considering buying in Woolwich, our limit is 300k which includes a 40k deposit. This is about the price of most new build 2-bed flats near the station. We picked Woolwich as it's fairly easy to commute to our workplaces, and Crossrail in 2018 should make it a good investment.

Then, the referendum happened!

I know that no-one can give certainties, but how do people think prices of 1-2 bed average flats will fare? My thoughts are that because demand still outstrips supply, and any actual exit from the EU is at least 2 years away, and with Crossrail coming, the prices should either stay stable, or increase, but my partner is (understandably) more hesitant.

My concern is that we will twiddle our thumbs waiting to see what happens, by which time the prices will have increased and we will no longer be able to afford to buy there!

Any thoughts appreciated...

megaginge

Brexit won't affect property prices.

Depending on who you believe, junk debt once again being hidden in AAA rated prime lending and resold as well as mis-rated debt in the first instance might.

IE, Brexit won't cause a recession but there might be a recession.

But London is likely to bounce back faster than anywhere else even if there is one.

And do you intend to stay for several years? If so what's to worry about. Just ride it out.

There's every chance you're right and if you wait you won't be able to buy any more.

I'd go for it.


But whether or not you trust what is just the opinion of one bloke who can't be bothered to explain why he feels this way (though he feels quite strongly that everything will be fine) is up to you.

jimpix12

I wouldn't get too caught up in the demand thing. Once the affordability goes, which it will in my opinion as banks start to tighten criteria, then prices are only going to go one way. And demand won't count for anything. There is demand from a lot of people to buy a Ferrari but can they afford it?

People can only afford to buy with props and government money inflating the market. If any of these are removed, then prices are only going down.

But it's your decision of course. Buy buy buy!

Grenage

If you're going to stay there for a long time, it's not a terrible idea to buy now when you know you can afford it. You only know one thing for sure at the moment - you can currently afford a flat in Woolwich.

If you're thinking about an investment, or plan to move after a couple of years, I would exercise much more caution. The next ten years might be rather rocky.

Or they might be the best ten years in the history of the UK economy.

But probably not.

Then again...

Crashy_Time

megaginge wrote: »

Brexit won't affect property prices.

Depending on who you believe, junk debt once again being hidden in AAA rated prime lending and resold as well as mis-rated debt in the first instance might.

IE, Brexit won't cause a recession but there might be a recession.

But London is likely to bounce back faster than anywhere else even if there is one.

And do you intend to stay for several years? If so what's to worry about. Just ride it out.

There's every chance you're right and if you wait you won't be able to buy any more.

I'd go for it.


But whether or not you trust what is just the opinion of one bloke who can't be bothered to explain why he feels this way (though he feels quite strongly that everything will be fine) is up to you.

Did you feel it was going to be a win for the Leave side?

jorpati

I am pretty much in OP's position.... nothing seems to be conclusive at the moment. I am not sure what is going to happen after the BREXIT i.e when UK actually leaves the EU (in two years?) but one thing is for sure... the result of referendum has definitely has "some" effect to the house prices in North West London for 3 bed flat property I am looking at. Based on my twice a week price check of 3 bed house/flat on Zoopla. I have seen asking price reduced by about 5% on atleast two houses and lot more 3 bed flats appearing on search result compared to pre-referendum.. under £300k. This could be just coincidental but it is easy to corelate the price drop to referendum result than to conincidence... Having said that all this can be just a temporary reaction by vendors/EAs trying to sell houses bit cheaper in fear of losing house values... For all these confusing reason I haven't been able to make up my own mind when to buy the house...

Crashy_Time

As I said on another thread, smart sellers dropped prices before the vote just enough to get a sale through in time IMO, not everyone is blinded by greed and delusion concerning property, and they will have saved themselves from the tasty losses to come. London is in such bubble territory that you need to ask yourself "Can I live happily with losing 100k on this purchase". If you can`t, then don`t buy now. IMO.

peter_we

According to the share price of builders, a drop of 5% is assumed. Valuers will take this in account and it will affect your LTV versus the pre-Brexit value.
London is assumed to be hit harder and faster, because its market is far more dependent on foreign money for property and jobs. The economy is also expected to get worst next year, so future falls have to factored in.

any actual exit from the EU is at least 2 years away,

No its UP TO 2 years away, its the maximum time for completion. Thats assuming they invoke Article 50. Once they do, there will be pressure to complete the agreement fast, Companies will move out before the 2 years is up, it will be a race for time.

My concern is that we will twiddle our thumbs waiting to see what happens, by which time the prices will have increased and we will no longer be able to afford to buy there!

They aren't going up soon, demand and confidence has evaporated. I would wait, keep saving and haggle the price of the Woolwich flat, Crossrail is a game changer.

Cakeguts

House prices go down in London as well as up. But if cross rail isn't likely to be arriving in Woolwich before 2018 that means that you will be living there for at least 2 years. If cross rail makes getting to work more convenient for you than where you are now. Then go ahead.

Crashy_Time

http://www.bbc.co.uk/news/business-36708844

Out,_Vile_Jelly

Do you actually like Woolwich and would be happy to live there for some time? New builds always lose some value once the newness wears off, and you are always going to be benchmarked in terms of price against your many identical neighbours. Would your £300k get you something a bit further out that you may want to live in for longer (ie garden, potential for extension/loft conversion etc)?