Category: Investments

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The Housing Market

When the decision was made to leave the European Union the UK housing market seemed almost unaffected. One would assume that the monumental decision (made in 2016) would’ve had immediate effects on our housing market, however this did not seem to be case. Nonetheless, the UK housing market is now facing difficulty, due to the large amount of uncertainty which has arisen as a byproduct of the Brexit Vote.

The decision to leave the European Union has not only caused uncertainty for the British currency, but also for the UK housing market. According to the BBC, house price growth has reached its slowest rate for five years – 1.6 percent. One could argue that the slowing rate has occurred due to the uncertainty which has been aroused by the Brexit vote. People are not sure what will happen to house prices post-Brexit, therefore they are lacking confidence to invest. The overall effect of this could be quite severe – especially in the long-term – if the transition out of the European Union is not smooth. Further research suggests that a disruptive no-Brexit deal could cut house prices by thirty five percent. It seems that the housing markets in the South East and London may already be suffering: house prices in London have already fallen 0.7 percent.

Statistics show how the UK housing market it struggling and it could continue to do so up until March 2019. Arguably, the most important aspect of the Brexit deal is the formation of a decent transition deal – if this does not happen then we could see the UK housing market suffer rather severely.

The Growth in Alternative Investments

An alternative investment is an asset that is not one of the conventional investment types, such as bonds or stocks. Alternative investments could include private equity, real estate and hedge funds. These types of investment have grown in popularity in the last few years. The movement towards alternative investments has been global with companies such as Goldman Sachs investing over $150 billion in alternative assets. Let us explore the trend further, in order to understand why the movement is growing.

The worldwide movement towards alternative investment grew significantly in 2016 as more investors moved towards property, infrastructure, private equity and so on and so forth. One reason for the growth in alternative investment is the implementation of asset purchasing programmes in response to the financial crisis of 2007-08 . These programmes have allowed strong gains across many private equity markets and traded bonds. As a result of this, large investors have become more attracted towards alternative assets. Many large firms have become increasingly interested in the movement: statistics show that companies such as Blackstone and JP Morgan spend $302 billion and $185 billion on alternative investment deals.

There are fears, however, that the large increase in alternative investment will leave investors disappointed in the future. This is because the increase in alternative investment has caused an increase in valuation of illiquid assets which are known for their substantial loss of value when being sold. Only time will tell whether such fears are well-grounded.