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Brexit: receded uncertainty makes UK property looks competitively priced

In this second article, we collate some of the immediate UK property market reaction.

Stephen Clifton, head of commercial at Knight Frank, summed up the sentiment following Thursday’s decisive victory for Boris Johnson:

“Real estate decision-makers have long craved greater political certainty, and this morning, that is the headline they have woken up to. We expect this clearer direction for UK politics to empower corporates to dust off expansion plans, developers to commence new schemes, and investors at home, and abroad, to quickly buy into what now looks like a very attractively-priced real estate market.  2020 will therefore be a much more active year on all fronts, as the UK reconfirms its status as one of the world’s few truly global real estate markets.”

Capital Economics forecasts that the rebound in business investment, and a loosening in fiscal policy, will increase GDP growth from around 1.0% in 2020 to approximately 1.8% in 2021. “The rebound would be bigger if it wasn’t for the risk of a no-deal in December 2020,” Dales said.

Will Scoular, co-head of origination at Investec Structured Property Finance, said:

“Uncertainty will not though be eliminated as questions over the UK’s permanent trading relationship persist. Still the removal of some of the Brexit fog should help lift business investment, UK growth and with it, housing activity too,” he added. Indeed, the Conservatives’ manifesto commitment of building 300k new homes per annum by the mid-2020s will boost to housebuilders. Jefferies picks Persimmon and Berkeley as among the sector stocks likely to benefit.

Liam Bailey, global head of research at Knight Frank, said:

“Supply is likely to rise as political uncertainty recedes and private and public spending stimulate the UK economy. This will put downwards pressure on prices, however some vendors may expect a bounce in prices, which may create a stand-off between buyers and sellers as the market re-prices.”

Jon Neale, head of UK Research & Strategy at JLL, said:

“The resounding victory for Boris Johnson’s Conservatives in the UK election will provide business and the property industry with a degree of much needed certainty. It now looks as if the UK will definitely leave the EU at the end of January 2020, based on the Withdrawal Agreement renegotiated by the Prime Minister earlier this year. There is likely to be a bounce in activity in leasing and investment markets as investor and business confidence return.”

Guy Grainger, EMEA CEO at JLL, said:

“With 40% of carbon emissions coming from the built environment, the real estate industry will play a leading role in fighting the climate crisis, and has the expertise to help the new UK Government deliver its promise to lead the way. But our house is on fire, and the target of Net Zero Carbon by 2050 is not ambitious enough. All political parties and industries must work together and collaborate to ensure we take the necessary action before it’s too late.”

james.wallace@realassetmedia.com