It is common knowledge that Brexit concerns have hit the UK housing market with the London a particular casualty. The situation seemed to calm somewhat over the weekend when the Prime Minister announced that a cabinet meeting had brought together warring parties to create a focused approach to Brexit. This situation has unravelled some was over the last few hours with the resignation of Brexit Minister David Davis and Foreign Secretary Boris Johnson. Theresa May’s Brexit plans are now in disarray and there is talk that Brexit could be reversed with another referendum potentially on the cards.
UK property market
While it would be unfair to suggest that the Brexit vote two years ago brought about the doomsday scenario that many experts predicted, it is beginning to have a drip feed effect on sentiment. The price of London property has been hardest hit with there are signs of a slowdown in growth in many areas of the country. Talk that large financial institutions, together with significant financial business, would be leaving London to rebase within the European Union has caused double-digit falls in London property prices.
So, if there was another referendum on Brexit (with recent polling suggesting a swing to remain) what impact would this have on the UK housing market?
Nothing is guaranteed
At this moment in time even Theresa’s position as prime minister is under great pressure. There is speculation of a leadership challenge from within the Conservative Party, Labour Party members are rubbing their hands with glee and criticism is rife. If we sit back and take a look at the situation from a distance, what does this actually mean?
At the best there will no doubt be an extension in Brexit negotiations with March 2019 no longer a viable exit date. In all likelihood there will be a new leadership challenge within the Conservative Party which would strengthen calls for a general election with a potential Labour government in waiting. What we do know is investors dislike uncertainty and even if calls for a reversal of the Brexit vote grew louder, which political party would dare go against the views of the people?
Concern and confusion
London has both the greatest to lose and the greatest to benefit from a continuation of Brexit negotiations or a reversal of the original decision. What we need today is calming words from the political arena and not the infighting which has broken out across all TV news channels. Infighting within the Conservative Party is rife with many experts suggest they will rip themselves apart, while the Labour Party is not without its own political infighting.
Jeremy Corbyn has regularly commented upon his hatred of capitalism and the fact that he will be coming after businesses if he does gain power. We also know that the Labour Party has openly discussed rent restrictions and other ways to increase the tax income from property investors. So, while the initial belief that Brexit may well be dead in the water has given a short-term uplift to London property investors, there is much pain and confusion on the horizon before the way ahead becomes clear.
How would the UK property market react to a Labour government?