Will Brexit Be The Wrecking Ball for Property in 2017?


2016 has been quite a year for global property markets. China's slowdown, the impeachment of Brazil's president, the Brexit referendum in the UK and the US presidential election have all contributed to a rather tumultuous year. Will property markets fare any better in 2017? And where precisely are the hotspots that bear watching as the new year unfolds? Abode2 reveals all…
UK – era of the staycation
In 2009, during the height of the recession, UK residents made 15.5% fewer overseas trips and 17% more domestic trips. Since then British holidays are still gaining in popularity: the number of domestic trips in 2015 was up by 11% on the previous year. The Brexit referendum's repercussions may well change how we experience summers to come. This is the new era of the staycation.

While residential rental yields are likely to remain strong (outside of London), with so many unknowns house price changes remain tricky to forecast. For UK property investing in 2017, we believe that holiday homes, coastal cottages, and hotels will be popular with investors looking for a favourable stamp duty environment, high yields and insulation from market uncertainty. To maximise returns, look for regions with natural or cultural appeal, unflagging visitor numbers, and an undersupply on the hospitality market.

UK – the hangman loosens the noose on landlords
Philip Hammond's 1994 election material slipped in a humdinger: 'hanging for premeditated murder.' The question is: when it comes to fiscal policy impacting landlords, will the new Chancellor play the hangman or the handyman?
With rock bottom mortgage rates and rent increases of 19% forecast for the next five years, it is still a good time to be a landlord. The lack of supply on the market could well spell a good opportunity for investors. University towns like Bristol and Cambridge and secondary cities like Liverpool, Manchester and Sheffield should remain on the radar for strong yields next year.

Europe – secondary cities withstand shaky politics
Europe's fractious politics will have a big year in 2017. For an early indication of how those decisions might affect property markets, look to Italy and Austria in the aftermath of their December 2016 votes. The defeat of Renzi's constitutional referendum in Italy, for example, could cause problems for struggling banks and infect the wider economy, including impacting mortgage lending.

The victory of the liberal over the far-right candidate in Austria's presidential election, however, favoured stability and European integration. Given that Vienna is unlikely to end its seven-year streak atop Mercer's global quality of living ranking and its housing market is just 20% owner occupied, the result may well safeguard the city's growing reputation as a buy-to-let hotspot.

Other cities we think merit attention for high yields in 2017 include Lisbon (thanks to tech clusters and the historic centre), Utrecht (enjoying the Netherlands' continent-beating 6.57% yields but without Amsterdam's bubbly prices), and Barcelona (still down on its peak, with growing business appeal).

Europe – Brexit's beneficiaries?
When (if?) Britain triggers Article 50 in 2017, will we see bankers transfer en masse from London to Amsterdam and start ups relocate from Manchester to Hamburg? While large scale migrations are unlikely, the pressure will be on for British cities to reassert their global appeal if the property market is to bounce along at 8% growth again in 2017.

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