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What impact would Grexit have on UK housing market?

Stock markets around the world have fallen after Greece rejected the terms of an international bailout in Sunday’s referendum, but what is set to happen to the UK housing market?

The Negotiator

Flag of Greece imageMany people believe Greece could now exit from the Eurozone after Greek nationals rejected the terms of an international bailout in Sunday’s referendum.

By voting ‘no’, the people of Greece have not chosen to return to the drachma. This is not a vote for ‘Grexit’. But there are some European officials who have already warned that creditors could take the ‘no’ vote to mean that Greeks had rejected further talks.

So far the UK housing market has remained largely unaffected by the goings on in Greece, thanks partly to the fact that the UK is not part of the Eurozone and so it has not directly contributed to bailing out Greece since the country got into trouble after the financial crisis.

The UK has only really provided a fraction of the assistance indirectly through its membership and contributions to the International Monetary Fund (IMF), and as a consequence, Jones Lang LaSalle believes that it is unlikely that even if Greece did leave the eurozone the UK’s housing market would end up being adversely affected.

Andrew Burrell imageCommenting on the implications of a ‘Grexit’ from the Euro, Andrew Burrell (left), Head of Forecasting at JLL commented, “Our view is that real estate will hold up well, even if the short term dislocation is dramatic. If a last minute deal cannot be secured, the prospect will be increased volatility, capital controls and rising bond yields, adversely impacting on financial markets.”

As a result, post-Grexit, core European property markets, including the UK, should continue to benefit from plentiful liquidity and low financing costs.

“Debt may become more expensive in peripheral Europe in the short term, but not in Germany, France and the UK.”

In fact, Burrell forecasts that given the turbulence elsewhere, many international investors will continue “to be drawn to real estate”, including that of the UK housing market, “for its defensive qualities”.

He added, “If the UK economy remains resilient, Grexit may even increase the attractiveness of the UK as a safe haven.”

July 8, 2015

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