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Investors turning to residential property as they anticipate no deal Brexit


A new independent survey of more than 1,000 UK-based investors has revealed their thoughts on the UK economy and the country’s position as an investment hub in light of COVID-19 and Brexit.

It found that 62% of UK investors are concerned that the government’s mishandling of the pandemic will result in a long-term recession, while 41% are worried about the impact of Brexit on their finances.

Only 42% of investors believe the UK will remain a global investment hub following Brexit and COVID-19. However, 51% believe UK real estate will be a sound investment regardless of Brexit and COVID-19. This reflects the confidence investors all over the world have in property as an asset class during times of economic trial, although the pandemic is encouraging investors to look at different sub-classes of real estate (most private investors are focusing on residential property while professional investors are trying to get out of office space).

Some 40% of UK investors think house prices will increase in 2021 compared to 19% expecting a decline.

The research was commissioned by investment firm FJP Investments; it found that over three-fifths (63%) are concerned about the government’s handling of the coronavirus pandemic resulting in a long-term recession.

Over half of investors in UK expect a no deal hard Brexit

FJP Investment’s survey revealed that 41% are worried about the impact Brexit will have on their finances. This figure rises to 53% for those with an investment portfolio valued over £250,000. And with Brexit negotiations stalling, over half (53%) are expecting a no deal outcome come 31st December 2020.

When it comes to real estate,  investors surveyed were more positive. Just over half (51%) feel UK property will remain a sound investment regardless of Brexit and COVID-19. It comes as Nationwide’s House Price Index for October revealed a 5.8% annual increase in average house prices.

With the Stamp Duty Land Tax holiday coming to end on 31st March 2021, 40% of investors expect house prices to increase in 2021. This compares to just 19% who expect them to fall.

“The economic disruption caused by COVID-19 clearly has investors worried,” said Jamie Johnson, CEO of FJP Investments. “With the Bank of England downgrading its latest GDP growth forecasts and announcing a further £150 billion economic stimulus, investors are concerned there is still a long way to go for the UK to overcome the pandemic-induced recession. At the same time, the lack of progress between London and Brussels on Brexit negotiations is posing further challenges. A no deal Brexit is looking increasingly likely, and this uncertainty is making it difficult for investors to plan for the future.”

Despite these issues, however, the research shows that investors are still positive when it comes to property. House prices have been growing at a remarkable rate recently and many investors are confident this will continue over the course of 2021.

This is important – any attempt to stimulate investment and economic growth will be boosted by a vibrant property market. As such, it is vital for the government to implement policies that sustain this interest over the long-term.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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