Well the good news is that Brexit is no longer the biggest political story of the years. Donald has trumped it, taking the White House in a landslide victory over opponent Hillary Clinton. So, what does this mean for London’s property market?
One lesson we have all learned from the 2008 financial crisis is that the global economy is now more interlinked than ever. Markets do not operate in isolation, and London’s property market is no different. The financial crisis revealed a two stage market in the capital, with London’s prime postcodes recording record levels of house price growth with an influx of foreign investment, while the market in secondary and tertiary locations all but froze as the wider economy faltered.
Fast forward to 2016 and the markets have once again been hit with not one but two major shocks, first in the form of Brexit and now in Donald Trump’s election to the office of US President. Initial figures suggest that the housing market’s response to Brexit has been largely robust, with prices continuing to rise in the majority of London postcodes, including many prime locations where the market had started to soften earlier in the year. While the latest NAEA and RICS surveys show that new buyer enquiries are lower than this time last year, the volume of new stock coming to market is equally subdued, suggesting that, at least in the short term, prices are unlikely to regress.
The Pound suffered sharp devaluation following the Brexit vote, making investing in UK property comparatively cheap for foreign buyers, which has doubtless benefited the London’s housing market in the intervening period. The U.S. currency initially fell against the pound following news of Trump’s win but has since recovered. A longer term adjustment in the GBP/USD exchange rate could reduce demand from foreign investors in prime London, as prime New York becomes comparatively cheaper.
It is still too early to draw any clear conclusions from recent news. After all, despite the very real economic consequences of the events of this year, unlike the 2008 financial crisis, said events are entirely political. The resilience of the market following the Brexit vote is a good indication positive sentiment, which one hopes may be enough to carry us through this latest shock.