Countrywide, the UK’s largest real estate agency, saw the price of its stock hit a record low after saying that its profit this year would be much lower than expected. A Brexit-related slowdown is at least partly to blame…
What does this mean?
The economic climate in the UK has been coping with uncertainty as a result of June’s Brexit referendum, which has likely discouraged potential property owners from making a purchase – bad news for estate agents who live on the fees that home sales generate for them. The UK government added to the industry’s problems yesterday when it announced that it would ban the upfront fees that the firms typically charge for renting out a property.
Why should I care?
The bigger picture: The Brexit vote has hurt many domestically focused companies. It’s tempting to look at stock prices of the 100 biggest companies in the UK (which are, collectively, up 15% since the days following the Brexit vote) and assume that all is fine in the UK. However, a lot of those companies are simply headquartered in the UK and do most of their business abroad. Many companies that actually do most of their business in the UK – like Countrywide – have seen their stock prices fall sharply in the aftermath of the referendum. Keep that in mind the next time someone tells you “UK stocks have performed well since Brexit.”
For you personally:The house price picture remains mixed in Britain. There has been a big dropoff in the number of homes sold over the past year or so (uncertainty caused by the Brexit vote is probably only partly to blame). Note that a drop in volume is not the same as a drop in price (house prices appear to be flat since the Brexit vote). Where house prices will go from here is – like many things in Britain right now – uncertain.
Originally posted as part of the Finimize daily email.
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