How will Brexit change Britain? We have been asking that question since the night we learned that the British people had voted to leave the European Union. Real estate is such a huge cost to everyone that it behooves us to think hard how Brexit might affect this market.
Will The British Look Back on the Brexit Vote with Happiness or Sadness?
A lot of people enjoy gambling. Sometimes our gambling activity involves the obvious casino gaming either at a land based casino or at an online casino. This kind of gambling is what many people think of first when they think “gambling”. Another popular form of gambling involves lotteries, sports betting, or even investing in the stock markets.
Casino Gambling
There are so many online casinos that the biggest gamble involved is playing at a casino that has not been vouchsafed by a reputable site. That’s why Intertops Casino Red has continued to grow over the years. There are, of course, many online casinos that are also highly reputable.
Land based casinos also continue to multiply. The latest iteration of the classic land based casino is called an Integrated Resort that includes much more than just a casino. It has facilities for families, conventions, restaurants, theatres, shopping and much more.
Gambling as a Nation
Sometimes entire nations take a major gamble. In these cases the end result of the gamble may not be known for years, decades, or at all. One such gamble, undertaken by a modern nation, is Brexit which a majority of British citizens voted for in 2016. Supporters of the vote to leave the European Union say that the EU has long overstayed its welcome. It is a massive bureaucracy ruling large nation states in Europe, imposing its will against unwilling citizens.
Opponents of the vote claim that the European Union is a fait accompli that cannot be walked back. Rather than leave the EU, Britain ought to work to reform the excesses of the EU bureaucracy.
Brexit and British Housing and Real Estate Markets
The subject of this short blog is how the actualization of Brexit might affect housing costs and values in the overall real estate markets in Great Britain.
Housing and real estate coast are amongst the highest costs individuals and companies taken upon themselves. Alongside housing and real estate costs are food costs, medical expenses, and transportation costs. Expenses for the types of gambling with which we began this blog pale in comparison to housing and real estate costs.
Uncertainty
No nation has left a political and economic partnership such as the European Union. When the southern states in the United States left the Union in 1860, it triggered the horrible American Civil war that saw hundreds of thousands of soldiers killed and wounded.
The British people have faced uncertainty before but this specific type of uncertainty is unprecedented. Its short term effect on real estate and housing will be that fewer people will risk large sums of money to buy a home or commercial real estate. Some properties might sit unsold for lengthy periods of time as the nation learns the economic aftermath of the Brexit vote.
There are some who say that the bigger effect on British real estate will come in the commercial market. This will involve leases for stores and other uses. Some landlords have already felt the pinch of lessees unwilling to sign long term leases. Some have asked to renegotiate their leases or are willing to renew a lease for a very short time.
Two examples from the United States might teach us the effect of uncertainty in real estate and other markets.
Donald Trump
On election night in November 2016, as people came to realize that the American electorate was in the process of electing a non-politician to the highest elected office in the land and to the office of the most powerful leader in the world, United States futures markets in stocks fell precipitously.
The sellers were not just worried Americans. The US stock exchanges are truly worldwide markets and much of the selling off was because Donald Trump posed a massive question mark on the future of the world, no less, whilst Hillary Clinton, for all her flaws, was a known commodity.
Sam Walton
In the 1950’s Sam Walton owned a small department store in a very small town in the northwestern corner of a small American state, the same state of which Bill Clinton was governor before he was elected president: Arkansas.
Sam Walton’s store was successful but he was a renter in the facility and the landlord informed him one day that he wasn’t going to renew the lease for the department store.
Sam Walton lost his store. At the time, he had no idea that he was about to found one of the largest corporations in the world. He saw only that a store like the one he had just lost faced grave uncertainty regarding its future if it was dependent on the whims of a landlord.
Sam Walton vowed to never again sign a lease for a store. The company he then founded, Walmart, owns every building its stores are located in. The certainty of never losing a lease has energized Walmart and propelled it to the top of its category amongst American retail stores.
Speculation
The uncertainty Britain faces regarding business with Europe and the concomitant employment of British workers means that the real estate market is in the position of relying on speculators to keep it afloat. Costs may rise to all real estate consumers as speculators raise prices but, if speculators are massively wrong on British real estate, there could be a precipitous drop in values that could generate a short term deflation in Britain.
Deflation is very bad for debtors because there is less money available to pay off debts that were incurred when there was more money around.
Bottom Line
What the British people need now more than ever is strong leadership from the government. One of the great fears is that Britain lacks a strong leader, both in the government as it is constituted today and in the opposition which is led by Jeremy Corbyn, a highly controversial person and a devout socialist.
The last thing the British people need now is weak leadership from the right that is too frightened of consequences to take the bold steps needed to implement Brexit and overly aggressive leadership from the left that lacks any fear that any steps it might take at this critical juncture might be wrong.
