If there is one thing I have learnt from working in the property market for over 40 years it's that any market prediction worth its salt takes into account the relationship between London and the regions. Sometimes the capital is a useful bellwether for the rest of the country but not always.
In the early 2000s, the central London market was booming thanks to an influx of investment from abroad. Such was the popularity of London with foreign buyers that the property market bounced back quickly after the 2008 financial crash - this was as much because of exchange rates as interest rates, something simply not seen in the provinces. For various reasons, successive governments then sought to squeeze the Prime Central London piggybank and overshot. So determined were they to give the appearance of being ‘hard’ on the overseas buyers that, by 2014, the market plateaued.
As mentioned, for regions outside London the post 2008 bounce never happened, but the growth of the London market has still played its part. The regions looked affordable compared to the capital in 2014 with many nominal values below the 2008 peak. Easily accessible mortgages and a search by investors for yields – pitiful at less than 2 per cent in London - started to redress the imbalance between London and Britain's other regions.
Cheap mortgage money and schemes like Help To Buy kept prices edging up until the unexpected rocket fuel of Covid boosted interest in the regions. This is being maintained with the return of 95 per cent mortgages and deposit help. Prices have responded positively as a result, up almost 9 per cent for the twelve months up to March 2021. This vast, government-backed cash resource, not quite the $2 trillion Biden is making available in the US, but perhaps well over £500bn over the next three years, means there’s little danger of a house market implosion in the immediate future even if inflation is entering people’s lexicon again.
Even if the stamp duty holiday comes to an end as planned in September, the government has gone to such great lengths to prop up the market that they are unlikely to reintroduce the tax in a manner that causes a major rupture. With one in six homes being sold for over the asking price and with prices reaching a record high, demand still outstrips supply.
The missing link has been London, which no one felt confident in calling positively after Brexit. Received wisdom was that Brexit would pull down the Prime Central London market, but prophecies of its demise seem premature. Not only have UK based buyers stepped up to the plate – possibly because much of Prime Central London looks, frankly, cheap – but also because far from being the poor man of Europe, Britain's vaccine success has rekindled the idea that London is capable of being all things to all men, yet again.
The same things that make London attractive apply to the UK. It’s relatively safe – politically and legislatively - is an island and it can trade East or West.
For me, and this hasn’t happened often, the prospects for the UK property market are uniformly positive – for at least the next three years. Prime London prospects look even better with falls now bottoming out and demand looking set to increase as confidence returns.