Why Brexit could be good news for London property prices
Updated: Jun 27, 2018
Bad news sells and this especially rings true when it comes to property prices. Brexit has created an abundance of negative headlines over the last two years, with the finance and property markets at the forefront of many.
Even before the UK voted to leave the European Union, Chancellor George Osborne warned that house prices would plummet by 10%, to 18% if such an outcome were to occur.
London’s status as the business hub of the world has also been brought into question post the referendum with warnings that financial firms in particular may embark on a mass exodus from the capital - taking thousands of employees with them.
Such scenarios might be good headline grabbers but I expect the reality will be much different.
The foundations that the London market has been built upon are strong and many will not change in a post Brexit world, in fact, for some, Brexit may even make the London property market more appealing.
Bucking the trend
There is no escaping that Brexit has contributed to the recent cooling of the London housing market, with figures from the Office for National Statistics showing London property fell by 1% during 2017.
As Brexit negotiations start to take shape however and the changes to Stamp Duty are absorbed into the cost of buying, a cautious confidence is returning to the market and the expected fallout from Brexit has not yet come to fruition
According to Knight Frank’s ‘London Report 2018’, employment in the capital is rising and in the year to October 2017, 128,000 new jobs were created in the capital.
While most major banks and insurers have announced plans to move a small number of jobs to offices in the EU, the report shows this has been much lower than previously expected. A survey by Reuters of over 120 UK and international banks and insurers had suggested 10,000 jobs could relocate as a result of Brexit – which even if it were to happen, is the equivalent of just 0.5% of total office stock in central London.
Government figures also show the number of people in London employed in the technology, media and telecoms sector overtook those working in finance and insurance in 2013 and this sector has continued to recruit and expand in London since the referendum to leave the EU.
So as office space fills, what will this mean for residential property in London in a post Brexit world?