Australians buy sterling to buy cheap UK property post Brexit
Australian investors are parking funds in the UK to snap up cheap property deals, speculating Brexit will enable them to buy cheap UK property post Brexit
Just hours before and after Brexit and as the sterling plunged, some Australian investors transferred money into the UK instead of withdrawing it, several visa and money exchange services said.
“One client executed a $1 million trade,” UK visa and money transfer service 1st Contact Australian managing director Sam Hopwood said on Friday.
“His theory is the property market is going to plummet and he wants to hold some cheap deals for a few years, and then bring money back to Australia.”
Expat financial adviser Atlas Wealth Management’s Brett Evans’ Australian client in Hong Kong wanted to transfer £650,000 ($1.2 million) on the weekend, also to buy property.
“Some people are holding off transfers to see how Brexit is going. But I do have a number of communications with clients who want to leverage on the fact that there is a high possibility of property prices coming down,” he said.
Some Australian investors believe there will be an exodus of migrants from Britain, causing vacancy in residential property, Mr Evans added.
“It’s a confidence thing too. The big financial houses, which are based in London because it was linked to the EU, may now have to move their operations to other countries,” he said.
“There will be vacancy created by [leaving] executives.”
But there are other investors who think residential development will slow as cheaper European labour leaves Britain, pushing up prices instead, Mr Evans said.
Listed money transfer service OFX also saw a rise in sterling transfers leading up to Friday’s vote.
“There were large wholesale exchanges occurring … mostly high-net-worth transfers,” head of corporate dealing Michael Judge said.
International property agent Savills said while it was impossible to predict where the British housing market would head, uncertainty before the vote slowed down buyer inquiries.
“A continuation of that uncertainty is likely to pull back price growth and transactions in the short term,” head of residential research Lucian Cook said.
“A fall in the value of sterling should bring some international buyers back into the market, albeit with potentially less gusto than in previous downturns given higher stamp duty costs.”
But Savills’ Australian head of research Tony Crabb warned against short-term speculation.
“The patient investor will wait to see what the authorities are going to do,” he said.
This article originally appeared as an interview in the Australian Financial Review