We have seen a marked increase in buyer enquiries since the beginning of the year particularly from overseas buyers despite the uptick in the value of the pound since the General Election result. In reality, many will have changed their money into pounds at, or near the bottom of the pendulum swing.
The London market remains particularly nuanced in terms of where the focus of the surge in demand has been. Whilst areas benefiting largely from interest from wealthy international buyers, who will be largely unaffected by any material change Brexit will bring one way or another to the UK, are seemingly more willing to take the plunge. Domestic buyers, however, particularly in “remain voting areas” will have a more pessimistic view and whilst life goes on, many will be keeping a close eye out on the macro-economic position as well as the micro.
For example, London losing its crown to New York as the leading global financial centre and the impact this will have on jobs in the City of London and therefore the trickledown effect in terms of those employees not purchasing properties is yet to be determined. Buyers continue to be straddled by often prohibitive transaction costs on entry and high taxation on hold and exit particularly in the investment sector.
It is also of note that interest rates have held at 0.75% and the Bank of England has forecast growth for the UK economy to be at 1%. The Chancellor having previously announced growth to be at 2.7%. The point being is that there are a lot of opposing statistics flying around at the moment and only time and more certainty will tell who will be proved right.
By the end of the second quarter of 2020, we will have a clearer picture as to the shape of the future relationship we are likely to have with the EU, whether a softer Brexit or complete divergence, each of those scenarios will have opposing effects on the wider economy and therefore on the property market particularly in the sub £2,000,000 bracket.
Whilst the effect of higher buyer registration reported across the property industry since the election, translates directly into higher transaction volumes; better pricing for vendors remains yet to be seen.
Only with the benefit of hindsight will we truly be able to tell as to whether we will be referring to this era as the Boris Bounce or the Brexit Blunder.
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