Australia’s property market is tipped to feel the flow on affects of Britain leaving the European Union

 

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Michelle Hele Network Online Real Estate Editor, News Corp Australia Network
June 24, 2016 3:55pm

If the British government follows the vote of the people and removes itself from the European Union, the Australian property market could benefit. While a formal exit could take up to two years, REA Group chief economist Nerida Conisbee said the uncertainty which emerged could impact on the commercial property market in Australia. Ms Conisbee said Australia tended to attract a lot of global capital for commercial property and, in many cases, would usually be competing with locations within Europe for this capital.

“With the level of uncertainty now in Europe and Britain, Australia will now look even more attractive for commercial property seekers,’’ she said.

WHAT BREXIT MEANS FOR AUSTRALIANS

Ms Conisbee said Australia’s high level of stability, economic growth and low sovereign risk had already given it a reputation as a “safe haven’’ for investment. The European Unions loss could be the Australian property markets gain according to REA Group first Chief Economist Nerida Conisbee. She predicted this would become more the case with what would now happen in Europe, “Our residential property market is also likely to be impacted.’’

She said London was a destination for many Asian property buyers, who could potentially turn their attention to Australia if uncertainty remained around the UK. “Australia is going to be seen as increasingly safe, particularly compared to the volatile European environment.’’

Ms Conisbee said while there may be some impacts on the Australian economy as a result of the British exit from the European Union, it would be “nothing enormous”. “The share market is likely to also be volatile and, as a result, we may see a flight to property.”

The ASX took an immediate hammering when it was revealed that the Yes vote had won. English expat and Australian real estate expert Andrew Winter was surprised by the result of the vote. He was in the UK a couple of weeks ago and said it was a hotly discussed topic by the locals.

“I think, like many I started with the opinion it wouldn’t happen, then when I witnessed the strong sense of feeling and passion from both sides it was clear it would be a close run race, but I still thought it would be a ‘stay in’ result,’’ he said.

Andrew Winter was in the UK a couple of weeks ago and said Brexit was a big topic of discussion. Mr Winter said the change would have an impact in the long term on all aspects of the housing market in the UK. He said there were many tenants from European countries in the UK and landlords could suddenly find themselves without replacements if they went back to their home countries. He was interested to see what the UK’s policy would end up being on foreign property ownership.

The immediate affect for the UK he said would be a dip in property values in certain areas, confusion and some panic which could create a volatile market.