What does Brexit mean for Australian property?

Britain has voted to leave the European Union in a shock referendum result that will see the UK break from the continent after more than 40 years.

While the formal exit will take two years, the effects of the result are already being felt with financial markets falling across the globe.

The impact of Brexit will likely have flow on effects to Australia, including the property market.

What does Brexit mean for Australia?

Australia now looks even more attractive relative to Europe. Although the exit was not entirely unexpected, it does add to uncertainty in the European Union, and in Britain.

Australia attracts a lot of global capital, particularly for commercial property, and in many cases would be competing for this capital for locations within Europe.

Australia is going to be seen as increasingly safe, particularly compared to this volatile environment.

Australia continues to have a high degree of stability, economic growth and low sovereign risk. It has a reputation as being a safe haven and this will be more the case now with what is happening in Europe.

Will Brexit effect the property market?

Our residential sector is also likely to be impacted. 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. Australia is going to be seen as increasingly safe, particularly compared to this volatile environment.

Media coming out of Britain suggests that the property market in London will be turned upside down by the exit. Whether this eventuates is uncertain.

Row house in London, UK. Picture: Getty Images

Longer term, it is possible that migration levels will be reduced – the European Union has made it easier for people to travel across Europe looking for work. Britain may miss out on this free flow of labour that it currently enjoys, so economic growth may be impacted.

What is the cost to the UK of leaving the EU?

Personally, I don’t think it is a good idea for Britain to have exited. I think the ramifications will be largely negative, particularly to their economy.

Will the rest of Europe still want to trade with them? Will it still benefit from lower cost labour from Eastern Europe? Will people investing see it now as a closed off market?

What about when Europe eventually returns to strong economic growth? Will Britain want to re-enter the Union then?

What about the political ramifications – Britain now looks very closed off.

A ballot paper asks voters whether they want to remain in the EU or leave. Picture: Getty Images

What is the longer term impact to the Australian economy?

In a more broader economic sense – the UK is our 7th largest trading partner – there may be some impact there but it may not be enormous.

Share market volatility is likely too – we may see a flight to property because of this as people eschew stocks in favour of bricks and mortar.