24th February 2019
I have said for the last few months that Brexit was having no impact on the residential sales market in Leeds, and that it was ‘business as usual’. I must confess that I now think Brexit IS having an effect on the market – but not in the way I suspect many would expect.
Since the start of the year we have seen exponential growth in demand from buyers for property in north and west Leeds, especially one and two bedroom flats. As there has been no significant change in interest rates recently and Leeds hasn’t experienced any dramatic news about local job losses, I can only think Brexit is the cause of the upturn in demand!
This may, initially, seem illogical, but when one considers the Brexit uncertainty for the past two years has undermined the stock market, we are seeing an increased number of investors seeking the long-term security of ‘bricks and mortar’ for investment. From my internal office analysis buy-to-let investors listed on our database are 7% up on two years ago. This is despite the negative changes to Stamp Duty and mortgage interest tax relief.
Demand from first time buyers has increased by around 9% over the same two year period, within our office. The effect has been dramatic for some developments of flats, where we’ve seen increases in value in excess of 25% in just 3 years.
The Bank of England Base Rate was 0.25% lower two years ago, therefore logically if interest rates are now higher one would expect buyers to be less eager to borrow money. I suspect the Brexit issue is making buyers think interest rates may increase in the next 12 months and that they should buy now with a fixed rate mortgage, whilst interest rates remain relatively low. Such buyers cannot be worried about their job prospects in the short to medium term, for if they were is committing to a mortgage at this time a good idea? This again makes me believe the Leeds economy is robust enough to handle Brexit, no matter how hard or soft the outcome.
Please do not think I’m pleased about Brexit. Like most people, I wish the situation could have been resolved months ago, allowing a clear vision of where we are heading. Controversial or not, our professional politicians are not clearly taking advantage of the Brexit stage to raise their profiles, rather than offering solutions to the problem. The majority of politicians have little, if any, business acumen (evidenced by some of the economic diatribe they expound). If they had any decent business experience they would appreciate apportioning blame in business does not lead to profit. Seeking solutions (and resolution) is the key to commercial success.
I cannot speak for other towns and cities, or even other areas of Leeds. My opinion is based on facts from our experience in north and west Leeds but for anyone with property in our local area, things remain very positive.