After a constant diet of doom-laden scaremongery for the past three years, it’s strange to see a major newspaper report that the IMF are now extolling the virtues of hugely resurgent growth in the UK economy. So much so that Independent GB Ltd will make the Eurozone look like a grubby corner shop. Even ‘business’ group the CBI – not known for their pro-leave stance – had to announce that optimism in British factories has gone from -44 in October to +23 in January, reaching its highest level since 2014. I wonder what event could have precipitated this turnaround? So at last we can say ‘get lost’ in 27 languages to all the remoaners and their tedious, Armageddon-flavoured tirades that we had to suffer before the Election.
Either this is fairy dust and unicorn juice, or the UK’s economic outlook is so bright that we’ll all need shades.
But however thinly you slice it, this is good news for the newly-Brexited Independent GB. It will bring in its wake a plethora of money heading towards our shores. Astute international investors can clean up on the last vestiges of cheap Sterling and help themselves to the many opportunities offered by this country.
Paradoxically, we have to extend heartfelt thanks to the Ginger Dunce and his, er, socially-ambitious wife. The antics of these ex-Royal nonentities have given the media something else to feast on instead of the neurotic hysteria surrounding Brexit. Bizarre as it may be, this pseudo-abdication crisis has given us some much-needed light relief.
Following the unexpected landslide electoral victory, maybe we should rebrand the period before December 12, 2019 ‘AD’ (or The Dark Ages Mk. 2) and the period afterwards ‘BC’ since this proto-‘Enlightenment’ has had such an effect on confidence.
What does it mean for the Residential Property Market?
For a start, enquiries have noticeably picked up from potential buyers (and a few sellers), which is very welcome indeed.
The UK is way ahead of most of the torpid western economies, particularly in Europe, which flails around in a mire of its own making. We can celebrate historic low unemployment, low inflation, low interest rates and borrowing costs. With capital markets scaling new heights, we should be uncorking something effervescent.
In my 45 years of trading, I haven’t seen such an optimistic economic and political outlook for a long time.
Regarding values, it looks like a one-way bet almost across the board.
Stock shortages still exist in the £1million to £3million range and with the push of demand, I can see values rising faster in this sector than anywhere else. Buyers who can’t find what they want could always rent until the market evens out – I hear there’s a very nice cottage available in Windsor Great Park…
Conversely, there’s a stock overhang of unsold property in the £5million to £10million sector and this will need to be absorbed by demand before any growth in values.
This scenario tends to bring about a situation where sellers recover their confidence very quickly – sometimes too quickly. This raises their expectations of value beyond the willingness of buyers to pay and this too could hold back transactions.
The spectre of Stamp Duty
Another factor which restrains demand is the spectre of Stamp Duty, since it has withdrawn seven out of ten prospective purchasers from the fray, leaving just the ‘hard-nosed, have to buy’ applicants.
While none of us want a runaway residential property market, its expansion exerts huge influence on retail spending and the growth of the consumer-led economy.
It’s imperative that Sajid Javid uses the March Budget to rugby-tackle Stamp Duty to the ground. The idiot-legacy of this tax has crimped the middle to upper ranges of the housing market over the past two years. As always with anything that hasn’t heard of the Laffer Curve, this ridiculous idea has deprived the Treasury of over £1billion of tax. I’ll leave it to you to calculate how many hospitals could be built for this humungous amount of money.
Although we’re in the middle of the melancholy January blues, incoming calls for our business have increased by some 25%. This bodes well for a surge of tangible transactions during the year.
It also vindicates those brave souls who saw through the frenzied remoaner screeching, particularly that of the BBC. Remember when every piece of positive economic news was prefaced (i.e., undermined) by the ominous phrase “Despite Brexit”?
So the record sale of Rutland Gate in Knightsbridge for some £200million is perfectly logical. If you’re a Chinese oligarch who’s managed to extract their money from ruling party clutches, the London property market is the best place to go shopping. Especially if your budget is nearly the size of the Marshall Islands’ entire GDP.
It’s the season where bargain hunters are queuing up for deals, snaffling around for the last crumbs of the previous bear market. Their feeling is that as we continue our ‘conscious uncoupling’ from our toxic, federal ex-partner, sellers may stand firm with regard to value. To those in pursuit of trophies I say, “Good on you”.