The Break-up

Anna White

On New Year’s Day we will have been together for 45 years. 

We didn’t quite reach our golden anniversary but we’ve got some special memories: remember that heady May night when we got into bed with 10 more members?

This March we split for good and, inevitably, I’ll lose friends – especially the more protective of Europe’s amigos. But one of the biggest casualties of the break-up will be the London property market. 


London was, until very recently, the darling of global real estate.

Over the last decade, however, the market has endured unprecedented levels of economic disruption and political meddling – by UK standards.

In fact, Brexit uncertainty is merely an added complication in this complex and distorted market.

The global financial crisis of 2008 triggered an almighty housing crash and was followed by the UK’s most sluggish ever economic recovery. 

However, led by prime central London, house prices bounced back from 2010 to 2014 (by as much as 20 per cent in the 12 months to June 2014) as global wealth flooded into the UK capital.  

Stretched affordability, tax changes that target the wealthy, two general elections in close succession, the referendum and Brexit-related job uncertainty combined to shake the sector.

Another distorting factor has been the availability of credit. Long term mortgages and Help to Buy for first time buyers, as well as a lack of stock, and demand from a burgeoning population has cushioned price falls in the mainstream market and given homeowners a false sense of security. 


There are bullish forecasts out there. The consultants at JLL have predicted that strong economic fundamentals, such as improving wage growth, will underpin a Brexit bounce back in prices. 

GDP is forecast to grow by 1.5 per cent next year, followed by two per cent in 2020 and peaking at 2.2 per cent in 2021. Earnings are also expected to rise by as much as four per cent for three consecutive years in 2021, 2022 and 2023, in line with house price growth in Greater London – the JLL forecast read.

It also predicts a 15.3 per cent rise in prices at the luxury end of the market in central London and 14.3 per cent across the wider Greater London area over five years, triggered by Britain finally leaving the EU next year. “As earnings improve, renters and wannabe first-time-buyers may slowly find that life feels a little easier,” Adam Challis, head of residential research at JLL explains. “Once we have confirmation of a deal and a reasonable transition period, people will start to feel more confident and this will encourage home owners and investors to buy again,”  Challis expects values to nudge up next year before accelerating faster with a greater sense of job security.


The JLL forecast, one of a handful, is premised on an orderly Brexit come March. 

Even if an agreement is reached in three months, other factors will surely shake fragile sentiment and restrict consumer spend albeit on retail, leisure or property. 

This is reflected in the latest poll from the Institute of Directors (IoD). Business leaders’ confidence in the British economy has sunk to its lowest level in over 18 months, surpassing the collapse in optimism that followed the inconclusive result of the 2017 general election, the survey of over 700 company directors revealed this week.

The IoD’s Confidence Tracker showed that overall optimism had briefly reached positive territory earlier this year following the initial agreement of a Brexit transition period, but has fallen steadily since April and hit its lowest point this month.

Individual trade negotiations with each different country are expected to take a few years, after which logistical and legal teething problems for importers and exporters are to be expected – in turn generating a relentlessly negative news flow. And investment by businesses into infrastructure, products and people is likely to be dampened. 

Uncertainty over the relocation of big-name employers and job loss fears will also restrict spending and the erosion of trust in politicians will take its toll for years to come.


The aptly-named Feargal Cochrane, of Kent University, is disparaging about Mrs May’s tenure: “Theresa May will limp on, flogging a compromise Brexit policy that has no support, to negotiating partners who have little faith in her capacity to deliver it,” he says. “UK politics is currently in a persistent vegetative state over Brexit, with no capacity to move forwards and no capacity to move backwards.”

It seems another change in leadership is inevitable and as buyer Henry Pryor reminds us, “we all know how much the property market hates a general election.”

Deal or no deal, this is a bad split. It will take time before buyers and sellers can again act with financial confidence, cast aside the break-up baggage and move house.


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