Brexit: To sell or not to sell

With the Brexit deadline just ahead, British expats who hold property at home may be considering their options.

Should they sell up and invest money into their lives in New Zealand, or should they sit on an asset and play the long game?

The UK Parliament has voted against a no-deal Brexit, which led to a rally of the pound, which gained more than 1 per cent on the back of the breakthrough.

With a vote to delay the scheduled departure on March 29, application to the EU for an extension and another vote on PM Theresa May’s Brexit plan next Tuesday, the pound is likely to continue shifting with the political mood.

Even in the event of an eleventhhour deal, uncertainty is likely to remain Kiwibank chief economist, Jarrod Kerr said.

‘‘Uncertainty is not good for a market, any market, including property,’’ Kerr said.

There were more than 260,000 British-born people living in New Zealand at the time of the 2013 census, and net migration from Britain of between 2000 and 3000 a year.

Gareth Kiernan, chief forecaster at Infometrics, said there were three main factors that came into the equation for property owners when deciding whether to hold on to their UK assets: The prospects for house prices, the exchange rate and returns elsewhere.

These hinge on how or if Brexit happens.

Looking at what happened to property prices directly after the referendum for a British exit in 2016 showed that the property market came under pressure, Kerr said.

The governor of the Bank of England, Mark Carney, warned of the potential effect of a no-deal Brexit on house prices last September.

‘‘[Carney] talked about a drop of as much as one-third in property prices,’’ Kiernan said.

However, the market is already flat. The Financial Times reported house prices in London have come to a standstill, and year-on-year house-price growth across Britain in January stood at its slowest in nearly six years, with a rise of just 0.1 per cent.

Expats may have already missed the opportunity to make a good sale because the optimism that a deal with the EU could be struck had faded, Kiernan said.

A few months after the vote when the initial shock had subsided might have been the ideal window, he said.

‘‘With the deadline now looming, it might be a case of having to hold on for the ride and hoping that the worst fears about the UK economy to headlines in recent weeks.

Traders had been buying up sterling ahead of last Tuesday’s vote on May’s deal, but after the proposal was defeated ‘‘the pound was dropped like a hot coal’’, Kerr said.

A bad Brexit would see the pound drop below US$1.20, he said.

CMC currency trader Sheldon Slabbert said that if there was some sort of resolution, ‘‘the pound could see above $2 against the kiwi again’’, and that would probably be the best outcome for people with property or funds in Britain.

If that were to happen, expats with assets in pounds may have an opportunity to take advantage of the exchange rate and the cooling property market in New Zealand as houses become more affordable, Slabbert said.

Selling property would mean finding somewhere else for expats to park their cash, and Kiernan said that even putting it in the bank on a term deposit would provide a positive return.