Trend Spotter

Supply & Demand

China’s economic slowdown in 2015 was the greatest in 25 years.  According to The Wall Street Journal, China’s GDP grew 6.9% last year, with some economists predicting a tougher year in 2016. Having the second largest economy, this is likely to cause concern among investors the world over.

The rouble has weakened significantly against GBP and all other major currencies, largely due to oil prices plummeting. In simple terms, this is a case of supply and demand fuelled in part by the US and UK’s decision to lift sanctions on Iran.

Stamp duty (SDLT) increases on residential ownership and the additional 3% added to second home purchases has reportedly made UK’s property taxes the highest of any country in the world. A worldwide taxation on non-domiciled individuals effective from 2017 is also expected to drive many of London’s wealthiest business owners overseas, taking their beneficial business interests and activities with them, such as employment, training, and so on.

While London property prices have outperformed the FTSE, DOW Jones and UK Gilts over the past 15 years, it has had its fair share of cyclical highs and lows. And although we champion the asset in the long term, it makes sense not to buy blindly. Instead, you should seek professional advice. With London property being a favoured asset class the world over, the internationally-held view is that the UK is a politically and economically-safe environment in which to conduct business.

London property prices have slowed down of late due to multiple factors (some of which have already been listed). However, with runaway prices and a global understanding that wealthy expats and overseas investors should be held accountable for profits earned here is probably not altogether a bad thing. Prices are likely to stagnate at the top end of the market where we believe opportunities for the canny investor still lie.

As we await the referendum on 23 June a ‘wait and see’ attitude has arisen from investors. My personal feeling is that if we  leave Europe, sterling will take a hit, making prices seem even more favourable for anyone buying in euros or US dollars. Arguably, Britain will be more protected and desirable than ever to foreign buyers.

If we were to remain in Europe, the risk and uncertainty that many are experiencing will be removed, allowing them to start making plans again. Either way it just needs to be over with so people can move on. With June 23 fast approaching, we don’t have much longer to wait.