Brexit: What does it mean for the Australian property market?

It’s been a global topic for months, and although the outcome of Britain’s infamous decision to leave the EU might seem like old news, the repercussions of Brexit are set to stick around. We may be geographically distanced from our Pommy mates, however there’s no denying that England still has a significant impact on our country. Brexit has already affected global financial markets and caused tension in the UK and abroad, but what impact will it have on the Australian property market?

Foreign Investment

Similarly to Australian markets such as Sydney and Melbourne, London is a highly sought after location amongst Asian investors. With ongoing uncertainty looming, there could be an increase in foreign interest on our shores. Furthermore, there has been no solid evidence to suggest that Australia’s property market is heading for anything other than stability, despite commentary about property bubble bursts in the previous 12 month period.

Higher value property

The June release from CoreLogic RP Data has revealed that the median dwelling value in Sydney is $984,790 and $797,150 in Melbourne. Both markets have seen an increase of 13+ per cent in the previous 12 month period. With potential new interest from foreign investors, we could see the median dwelling value continue to increase for the remainder of the year. This is great news for sellers, but could be difficult for new home buyers who are trying to break into the market.

Seller and buyer confidence

Looking long-term, we could see an increase in uncertainty amongst investors around the effects of Brexit on the global economy. Some economists suggest the UK could enter a recession and therefore a low economic growth. Although the impacts on Australian shores may be minimal, this could affect seller and buyer confidence in the market. It is like the RBA will cut interest rates to stimulate growth and help the AUD during this period.

Overall we can maintain that property remains a stable investment strategy within Australia. Investors should watch buyer enquiry volumes, property appraisal numbers and consumer confidence scores to gain insight into the market.

If you’d like to discuss your investment options, contact CPS Property today.

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