22 Bishopsgate is a commercial skyscraper under construction in London and is one of the many projects that investors were considering cancelling after the UK voted to exit from the EU last year. However, the decision to proceed with its construction this autumn is a sign of the relatively positive outlook of investors for the UK market after the uncertainty that clouded the country after Brexit.
This is really good news for people who are looking forward to moving into a new house this year.
The potential effects of Brexit are a bit complex given the fact that the event hinges on what economic actions the UK will experience after leaving the EU, and how the rest of the world will react to such a move. According to FXCM, one topic that is central to the future of the UK is its trading relations with the different countries around the world.
When Britain decided to leave the EU through a vote, economists predicted that there would be no reversion to the rapid rise in commercial and residential property prices. However, while many panicked the worry has now dissipated over time.
For the investors out there, it seems that the share prices for housing companies are now only at 15.6% below pre-Brexit vote levels. Right after Brexit, the decline was at a whopping 37%. Real estate shares, on the other hand, are only 10.6% lower now compared to the 22% decline it experienced right after Brexit.
According to a study conducted by the Investment Property Forum last year, the value of houses in the UK was predicted to go down by 4.1% at the end of 2016, and 3.6% in 2017. However, with the positive outlook on commercial residences in the UK moving forward, this prediction is now rendered useless.
Rental properties, however, will sadly remain high due to the fact that landowners need to keep returns in positive territories for all sectors. Landowners also need to recover overseas interest for real estate assets in the UK, which is partly influenced by the drop in sterling.
"No one is denying that risk has gone up; a risk driven by uncertainty, certainly, but also by the feeling that the global economic cycle is inexorably maturing, " said Miles Gibson, the head of the UK research at the property adviser CBRE.
House prices will remain flat but with lower transaction levels, as people are still taking a more vigilant approach toward purchasing a home.
"Although there remains considerable uncertainty around Brexit, the mortgage market is very strong with low interest rates and powerful support for homebuyers in the form of Help to Buy, "said David Thomas, the Chief Executive for Barratt Developments.