The UK’s controversial 2016 decision to leave its biggest trading partner, the European Union, caused a flurry of political headaches and several high-profile resignations in the British Parliament. But the infamous separation of powers appears to be a blessing in disguise for the UK property market as a recession looms on top.
After the Brexit vote, some foreign investors increased their investments in other regions of Europe. With the help of low-cost debt, it helped fuel a firestorm of demand for buildings in places like Paris, Berlin and Milan that sent prices soaring to all-time highs. As interest rates and yields on government bonds continue to rise, those high prices and meager yields look less appealing, leaving some regions of Europe more vulnerable to a downturn in property.
But properties in the UK are trading at a discount to comparable properties in Europe thanks to a buffer created by the Brexit vote. Not only that, UK property yields are less susceptible to interest rate rises. With all this, the UK is predicted to be Europe’s best performing property market over the next five years.