I don’t want to be political in these deeply divided times, but I will be candid. I voted to Remain and was disappointed by the result, but I am a pragmatist. It is important to look at the bigger picture.
Up until recently, the vicissitudes of the central London market were dominated by the sizes of bankers’ bonuses. The serious redistribution of wealth post financial crisis benefited the super wealthy and the international buyer became prevalent in aiding the post-crisis recovery in London property. “What happens now?” is the question on everyone’s lips.
There are a few possibilities worth considering. Firstly, let’s talk currency. At the time of writing this article, the pound was down against the US dollar by 14%. London property does not need everyone to be benefitting from such moves – after all, it only takes a relatively small number of buyers to move a market. Many have reaped the rewards from the US dollar’s strength. Look at the FTSE 100 as an example – it has been one of the best performing major stock indices since the referendum result. We have already seen a spike in enquiries from buyers holding foreign currencies. This could be the tip of the iceberg.
Furthermore, FTSE businesses that have already been hit badly by Brexit are mostly within the property and banking sectors. The banks are factoring in reduced income from mortgages, with Mark Carney talking about potential reductions in The Bank of England’s lending rate (possibly to 0%). With roughly £1.3 trillion of outstanding mortgage loans, there is a definite threat to revenues within the banking sector. Conversely, lower mortgage rates will help support and possibly enhance property prices.
The demise of George Osborne seems inevitable following the result. The new SDLT arrangements introduced in the 2014 Autumn Statement have caused severe damage within central London’s property market and the property sector has taken a beating following the referendum. I think it more than likely that at some stage the government will reset the SDLT bandings at more reasonable levels.
Figures released by travel consultancy Forward Keys have shown a 9.4% year-on-year inflation in flights booked in the nine days immediately following Brexit. An increase in the number of visitors to the country will almost certainly lead to a visible rise in those looking to buy property.