Recent news to shock the global market is that of June 23, 2016 referendum whereby British voters made the shocking decision to exit the European Union – meanwhile coining ‘Brexit’ as the latest catchphrase. The referendum roiled global markets, including currencies, causing the British pound to fall to its lowest level in decades.

Sure, this controversial decision has taken many people by surprise but the real question on everyone’s lips is: How will this impact Australia? While we do not have a crystal ball, given many of the latest reputable reports we can help offer a sneak peek into what this could potentially mean for the real estate industry here Down under – and it is not bad at all.   

First, here is a glimpse of the immediate effects we have witnessed:

1.  The British pound drops by a record -3.4805% and by Tuesday was hovering at a roughly 30-year low at $1.3342 (1)
2.  The Euro dropped by a whopping -1.1335%
3. Billions of dollars were wiped off the value of Australia’s stock exchange (2)

Now, let us remember, this all happened in the initial few days after Brexit was confirmed. Since then we have seen the Euro bounce back. But while this may be happening now, the real posing question is: What will the effects be long-term?

To help answer that question, we refer to a recent www.realestate.com.au article, which highlights several ways in which Brexit might actually boost help boost the Australian property market:

The attractive alternative

Britain’s recent decision has created a lot of uncertainty in the European Union, and in Britain. This means Australia now looks even more attractive in comparison to Europe and thus opens the potential for an entire new breed of international property investors.

The safe option

Australia is going to be seen as increasingly safe, particularly compared to this volatile environment - especially given that London is one of the main destinations for Asian property buyers. Again, this uncertainty may lead them to look at other destinations such as Australia.

The new investment strategy

Share market volatility is likely too – we may see a flight to property because of this as people moving their investment strategy; shunning stocks in favour of bricks and mortar

The population growth

In a separate SMH article, research from Macquarie economic analyst, James McIntyre, explores another potential benefit for economic activity will be all thanks to faster population growth.

James believes that with the population expanding near its slowest pace in a decade, such an acceleration, alongside further expected cuts in interest rates, could provide support to the housing market.

McIntyre feels the prospect of stronger population growth, as a result of Brexit, alongside further interest rate cuts, “could boost housing demand, and confound some of the more aggressive expectations for negative housing spill-overs”.

Seems he is not the only one with this positive mindset post Brexit. The head of Real Estate in one of the big national industry players this week was quoted by news.com.au as having said:

“There is going to be a number of positives for Australian property specifically… while you have that upheaval and lack of surety in the UK market they are going to look for other opportunities.

“Any investor will look for longer term or medium to longer term stability and I don’t see how London is going to provide that to investors."

He concluded by saying the uncertainty of Brexit would bode well for global investment into Australian real estate and could draw more international investors to buy residential property in Australia.

All up, there is no denying that the entire ‘so-called’ Brexit saga will bring its shares of highs and lows over the coming months – maybe even years. However, from where we stand here in Australia, seems we may be able to expect more of the highs than the lows, which is actually quite exciting for our economy.

From a sudden influx of new money coming our way as investors start looking for somewhere new and not so volatile, to an overall boost to our population, suggesting a very positive nationwide push in property prices might be just around the corner.

To ride the Brexit wave Down under, contact one of our property specialists and find out how you can make the most of what lies ahead. For a one-on-one consultation call 0419 782 133.