Britain has voted — Brexit is back on track.
The election of Boris Johnson as prime minister could bring new stability to the region after years of political tumult, and residential real estate professionals in New York are hoping for a positive ripple-effect.
Compass agent Charlie Attias, who has a large international client base, said New York’s real estate market has been feeling the impact of Brexit for several years. “Investors want stability,” he said. “They want a safe haven.”
Compared to London and Hong Kong, New York is seen as a safe bet, he said. One of his clients, a financier from London, recently listed his $20 million house in London after going into contract on an $8 million condo on the Upper East Side. “He’s relocating his family,” Attias said.
Seth Levin, an agent with Keller Williams NYC, believes buyers would look favorably on New York’s relatively weak condo market as the pound strengthens. “While this is great for those who currently own in the U.K., they are all negatives for new investments,” he said.
Astrid Pillay of Halstead said the effects of Brexit will depend on whether it is a “soft” or “hard” exit from the European Union. (In a “soft” Brexit, the U.K. would remain closely aligned with the E.U. In a “hard” Brexit, the U.K. would exit the E.U. completely.)
“If it’s a hard Brexit, the London market will be viewed as unstable and unreliable and that’s when investors will be looking at alternative markets,” she said.
Some in the industry are taking a cautious view. “It looks like they’re headed to the finish line, and that’s great, but I think, for at least New York City, there are still a number of hurdles that will limit the boost from just Brexit getting done,” said Gregory Heym, the chief economist for Terra Holdings, Halstead’s parent company.
“But this could be the start of some momentum,” he added. “We have this, we have phase one of the trade deal with China, so that’s also a positive development. I think these things will calm the stock market.”
Foreign buyers have retreated from New York’s luxury market in recent years, contributing to an oversupply in new development condos and a slump in prices.
While an ease in global instability could draw foreigners back to the market, Heym said there’s still a healthy dose of volatility on home soil that could hit the financial and housing markets.
“There is still impeachment hanging out there,” he said. “There’s an election coming up in less than a year.”
In the U.K., Stephen Clifton, head of commercial at Knight Frank, said in a statement that he expected the clearer direction in UK politics “to empower corporates to dust off expansion plans [and] developers to commence new schemes.” He believed the outcome would also spur investment.
Tom Barry, a London-based agent with Keller Williams UK, said concern around Brexit had caused a lull in the local market. In the wake of the decision, he’s expecting new confidence to drive in transactions from both domestic and international buyers, but questions persisted about how — and when — Brexit will take shape.
“There will be a potential short-term spike but then the markets will adjust to that and react to what will happen over the next few months,” he said.
“We’re into more unknown.”