London’s property market has always been famed across the globe as one of the most secure places to invest. Post-referendum, the question on everyone’s lips in the city is how the characteristics of this fast-paced, competitive market will fare during this period of uncertainty.
Critics argue that as a result of Brexit, there will be less interest in the market due to the impact on lending and investment. However, as we know, foreign investment is a crucial source for the London market, and figures from the Financial Times recently suggested that 82 per cent of transactions in the City of London in the first half of 2016 were from overseas purchasers. And with the rates of sterling comparing relatively weakly to those of foreign currencies after the result, we’ve already seen a significant rush of foreign buyers looking to take advantage of these exchange rates, and can expect this to continue in the short term.
Meanwhile, it’s widely recognised that we do not build nearly enough housing in the UK, and particularly in London, to meet demand. The upward pressure on pricing and demand for houses will remain, regardless of the short term impact by Brexit.
The good news for UK buyers is that some order seems to be being restored to Britain’s politics, with Theresa May’s Cabinet, including Philip Hammond as Chancellor, setting out to negotiate an exit from the EU that is in the interests of British citizens. In fact, the speed at which May has been sworn in as Prime Minister, in stark contrast to the eight week wait we had anticipated before Andrea Leadsom withdrew from the race, instils further confidence that the new Cabinet will hit the ground running from the very start of the autumn session of Parliament. This will set a strong course for a return to economic stability, and therefore more confidence in London’s property market.
Additionally, Mark Carney, Governor of the Bank of England, has in the last month led the Bank away from the economic volatility that many had expected, and despite Brexit fears, left interest rates on hold in this months Monetary Policy Committee meeting, causing the value of the pound to surge, as a result attracting more investors here. Carney has indicated that a reduction in the base interest rate to 0.25 per cent in August is quite likely, which could stimulate borrowing and increase affordability.
Whatever your views on Brexit, it is now time to think as positively as possible. In the longer term, our government will become wholly accountable for British political activity, legislation and regulation. The ability of Governments to excuse inactivity or negative legislation and regulation on Europe will be eliminated Ministers will once again become fully accountable for their actions, and it is in their interests, as much as those of the rest of the country’s, to support the property industry here.
Despite facing uncertainty over the coming months and years, it goes without saying that London’s property market remains one of the world’s most competitive. Regardless of the fluctuations in sectors that influence investment in property here, we can expect those investors to find ways to negate the brick walls, as after all, in times of uncertainty, its the investments that are inherently safe that remain the most attractive.
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