The world is astounded in the wake of Britain’s controversial decision last month to formally leave the European Union after decades of mutually beneficial coalition. The impact of this breach will ultimately be felt the world over, with financial markets already falling worldwide, and with more to come during the predicted two year dissolution process.
We may be a world away here in Australia, but the effects of Brexit will most certainly be felt here, and the Australian property market is just one entity that will likely be impacted. These impacts might well be positive in nature. The UK is Australia’s seventh largest partner in trade, and coupled with share market volatility, people may reject stock investments in favour of property.
Britain and the EU at large are in the midst of a period of great uncertainty, and this will continue for some time to come as the trickle-down effects of the changes to both Britain and Europe occur. Australia, on the other hand, when compared with Europe’s volatile economic climate, is relatively stable – and this stability will in all likelihood translate to a wide attraction of global capital for both investment and commercial property. With our low sovereign risk in Australia, the growth of our economy, and our relative stability, we are seen worldwide as a safe haven.
This is great news for the Australian property market. Not only will our commercial property sector be impacted by Brexit; so too it is likely the impact will be positive for our residential sector.
Wealthy Asian property investors have traditionally favoured London as an investment base, and the London property market is widely predicted to suffer as a result of Brexit. Additionally, migration levels to Great Britain will in all likelihood be reduced due to halting free movement between Europe and the UK, and with this stalling of the free flow of labour from Europe, so too will the British economy potentially suffer. The economic ramifications for Britain in light of breaking from the EU are envisaged to be negative in both the short and long term.
Current uncertainly is likely to trigger Asian investor interest in other destinations, and Australia is in a prime position to benefit from this trend. This can only be good news for the Australian property market. We will be watching how it all unfolds with great interest.
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