Published: 26/04/2017 Last Updated: 27/06/2017
Although this is our April newsletter, I realise I am running a little late and this has, in fact, snuck in to May so I hope, if you are in the UK at least, you are enjoying a restful Bank Holiday.
Since I wrote my last update the most important change in the political landscape (and impacting on most other environments too) is Theresa May's decision to call a snap election for 8th June.
Although political pollsters and pundits have shown themselves to be rather poor in calling the outcome of significant electoral processes worldwide (let's see if they get the French elections right), it does seem very likely that this election will return a Tory government with a sizable majority. The impact on Brexit negotiations can be debated either way (Tony Blair seems to think this will lead to such a hard Brexit that he will be required to re-enter the political arena to re-dress the balance). Currently, however, this state of affairs does not seem to be having a negative impact on the economy, the Stock Market and the value of Sterling. In fact, combined with the massive tax cuts now being ushered in by the Trump administration, much of the global economy seems to be operating on steroids. Whether this will end in tears is impossible to say but the positives I would draw from the current state of affairs are that we have a certain and greater degree of clarity about the future than we have had for many years.
Depending on your political persuasion this may or may not be to your liking but it does tend to mean that businesses and people can start making plans which is generally good for the economy and the country. Also, in central London, an area so inter-linked with the health of the financial services industry, the rise of the Stock Market generally, after a certain delay, tends to lead to money being invested in other areas; and this is, primarily, property.
In the markets we serve, the prime central areas, which were impacted by the downturn first (around Spring 2014) are showing the first, albeit small, signs of recovery. These are areas where the purchase of property is more of an investment decision than areas slightly further out which are driven to a greater extent, by local market forces. I think the areas below the super-prime will take a little longer to recover but perhaps by the end of the year they too may begin to see a degree of strengthening. Overall, I don't see an immediate end to the downturn, but, to mis-quote Churchill (!), it's not the end of the beginning but in fact (hopefully) the beginning of the end.
In the rentals market, I do, unfortunately see the malaise lasting a while longer. I think the level of development will reduce as large levels of stock fail to achieve the returns expected but this will take quite a while to play out. As mentioned in other newsletters, I doubt very much the 3 plus million EU nationals will be forced to return home but clearly immigration levels are not going to continue at levels seen in the past and that and changes in government policy will continue to bite into the rentals market.
Until next month, best wishes to you all.