For most of us in London ‘Brexit’ was something that was never really on the cards. It came as a genuine shock to all of us in the industry and throughout the media, it sent the country into a state of sheer panic. Firstly, we saw the FTSE 100 and FTSE 250 taking major hits but with Property PLCs taking the heaviest blow. Secondly, we saw the GBP hitting a 31-year low against the dollar and various media articles emerged predicting the end of Britain as we knew it. Scaremongering was out in full force and confidence in the UK’s economy and property markets faltered.
However, now that we’ve had time to call off the witch hunt ‘Brexit’ looks to be more of a hangover rather than anything with any lasting damage.
The large multinational banks have taken a U-Turn on the predicted doom and gloom – Most of the corporate and high street banks warned they would look to move operations overseas due to passport rulings, turmoil in the markets and future uncertainties if the UK left the EU. However the majority of these corporations seem to have taken a U-turn and no one’s jumped ship just yet. Goldman Sachs’ Chief European Economist, Huw Pill, stated that “The downturn in the UK – while still substantial – is likely to be shallower than we thought in the immediate aftermath of the referendum.” By injecting confidence in the UK economy this will in turn add confidence to the property market, which currently remains calm.
House prices are continuing to rise as growth continues - The Office for National Statistics recently reported that house prices on average grew by £1,000 in July post ‘Brexit’. It is true that we have seen a drop in property growth, however we are a long way away from property prices stagnating, let alone falling. The Halifax Index still shows an annual growth rate of almost 7% and Simon Rubinsohn, RICS Chief Economist stated that “There are clear signs that the housing market is settling down after the initial surprise of the outcome to the EU Referendum”.
Demand still outweighs supply – London has and always will be somewhere people look to move to and according to the Office of National Statistics London will reach an estimated population of 10 million by 2024. With this rate of influx into the Capital we will struggle to keep up with the demand for properties as there is already a chronic shortage and this will inevitably drive prices higher and higher as we see vendors compete to secure the best deals. Stirling Ackroyd’s Managing Director -Andrew Bridges, believes that “Rising prices are being fueled by the ongoing shortfall of properties on the market - there are simply not enough people selling or enough new homes being built to match demand.” A serious look at the Capital’s planning process needs to be addressed if population growth continues.
In conclusion, the market might seem to be slowing but if we look at the underlying driving factors which move property prices, London’s historical property trends look to outweigh the result of 'Brexit’. Finally not only are London prices continuing to grow, overseas investors are returning to the market and property is continuing to sell and ultimately we must remember that until London works out its property supply problem, prices will continue to rise for the foreseeable future.
By Joseph Robinson, Head of Client Services at Stirling Ackroyd