If we remain \u2018In Europe,\u2019 needless to say, nothing will really change and I predict that the market for property up to \u00a31million will carry on its relentless path with growth of circa 2-4%.\u00a0 This sector was excited by the government\u2019s Stamp Duty \u2018bribes\u2019 before the Election in the Autumn Statement of 2014. \u00a0After the watershed of the Stamp Duty increases on Buy-to-Let investments in April 2016, activity in property, in this price bracket, has been subdued with far fewer transactions and a general shortage of stock.<\/p>\n
Activity in the middle market and the super-prime sectors will continue to be dampened by the aggregated affect of Stamp Duty \u2018hikes\u2019, fiscal changes to Non Doms, ATEDs, oil price drop, the gyrations of world stock markets and the general slow down of the world economies. In this sector, illiquidity is a major problem where the numbers of transactions are down by up to 50% or more in London. \u00a0Underlying prices will continue to ease by about 10% per annum as the number of properties available overwhelm the dwindling pool of \u2018real\u2019 cash buyers around at any one time. I estimate that from the peak in May 2014 values have dropped by 30% in this sector.<\/p>\n
Thank goodness that with oil prices remaining low there is no upward pressure on inflation and, therefore, Mr. Carney can be put back into his \u2018little box\u2019 since Interest Rates (and therefore Mortgage Rates) are not going to rise for a year to eighteen months or so, perhaps longer.<\/p>\n
How will Brexit affect the Residential Property Market in London and the UK?<\/p>\n
In the months following the Referendum it would take a little time for the Great British Public to digest the ramifications of being outside of Europe. \u00a0David Cameron will be \u2018the walking wounded\u2019 for a while and in all probability will bring forward his retirement plans earlier than he would otherwise have liked. \u00a0Whether the new leader will be Osborne, or more likely Boris, will be the question on everyone\u2019s mind. \u00a0Whilst this will generate some uncertainty at first, once it settles down, there is no reason to believe that the prevailing economic policies will change very much although, I am sure, if it is Boris, he may want to \u2018stamp his mark\u2019 by way of nuances to the status quo. Let\u2019s hope Stamp Duty is one of them. It is unlikely that Osborne will continue to be Chancellor under a new \u2018Johnson regime\u2019 and this task is likely to fall to Michael Gove who would be more than qualified for the task.<\/p>\n
I firmly believe, along with an array of illustrious commentators, that, despite the rhetoric to the contrary, there will be inward investment from multi-national companies and investors such as Nissan, Honda, IBM, Ford, Google, Microsoft etc. who will want to benefit from the new Social Contract, relaxed labour laws and de-regulation that will, hopefully, be introduced in the period after the Referendum. This, one hopes, will enable the UK economy to \u2018spin faster\u2019 once it is free of the \u2018shackles\u2019 of European regulations which has served to slow our progress to date. Lest we forget, \u2018regulation is the enemy of innovation and innovation is the engine of enterprise\u2019.<\/p>\n
\u2018Operation Fear\u2019 has tried to make the Electorate believe that there will be an exodus of Banks going to Frankfurt from London but this is all nonsense as evidenced by the news that HSBC has recently confirmed (even before the Referendum) that its \u2018hub\u2019 will not move to Hong Kong as was much speculated hitherto.<\/p>\n
Paradoxically, Ludwig Erhard de-regulated Germany after the war by, amongst other things, eliminating price control that allowed the country to grow exponentially such that Germany was free of food rations long before the highly regulated UK at the time.<\/p>\n
The chances of Frankfurt becoming the new Financial Centre of the World are unthinkable.. has anyone been to Frankfurt? \u00a0Let\u2019s put it this way …. for excitement the average \u2018Frankfurter\u2019 leaves their home at 7.30pm \u2018to watch the traffic lights change!\u2019<\/p>\n
Thatcher de-regulated London in the \u201880s and made it open for International business. \u00a0This allowed it to metamorphose itself from a souvenir Capital (rich in heritage as Paris is today) into \u2018The Greatest City on Earth\u2019 where the centres of excellence are all, very conveniently, in one place. Today, the Capital is at the cutting edge of technology, couture, cuisine, culture, commerce and proudly boasts that it has the largest Financial Services Industry in the world. \u00a0As such, I believe, that we will be in an unassailable position despite any attempt by the EU to prize this \u2018mantle\u2019 from us.<\/p>\n
If under a new Leader the new Conservative administration is more sensitive to the \u2018woes\u2019 of property owners in London, then an emergency Budget could be arranged to try to address some of the more draconian measures that have been imposed to date. \u00a0A new Chancellor could address the damage done to middle-income groups who have been seriously disadvantaged by government policies to-date since the Election. \u00a0Even the first time buyers have become disenfranchised by the growth in the property market at the bottom of the ladder and since the changes to Buy-to-Let fiscal legislation there will be fewer private rental properties available, with prices rising, as former landlords sell these investments which is a \u2018double hit\u2019 for them.<\/p>\n
Which ever Chancellor presides they will have to address the intractable problem of the Budget Deficit that remains stubbornly unchanged from last year to this at \u00a370billion. Undoubtedly, the reform of private pensions will be on the agenda which was cynically postponed by George Osborne in this years Budget in order to not offend the Electorate before the Referendum and, at the same time, soothe the inflamed emotions of the Tory Euro-sceptic backbenchers.<\/p>\n
I know that the Chancellor wanted to \u2018cool\u2019 certain parts of the \u2018runaway\u2019 property market in London, but as we all know, governmental intervention is notoriously \u2018clumsy\u2019 when they try to interfere with markets. \u00a0He probably didn\u2019t appreciate the damaging affects of his measures on liquidity and even Stamp Duty Receipts that, paradoxically, will be \u2018down\u2019 this year despite the rises in SDLT rates.<\/p>\n
There are interesting times ahead of us but uncertainty undermines confidence and, as such, the sooner that we get this Referendum over and done with the better! \u00a0Let battle commence.<\/p>\n
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If we remain \u2018In Europe,\u2019 needless to say, nothing will really change and I predict that the market for property up to \u00a31million will carry on its relentless path with growth of circa 2-4%.\u00a0 This sector was excited by the … Continue reading