Rishi Sunak was appointed Chancellor of the Exchequer on 13 February 2020. The MP for Richmond in Yorkshire succeeded Sajid Javid, and he could not have wished for a more turbulent start to his tenure.
At the beginning of the year the focus was on “getting Brexit done” and kickstarting parts of the UK economy after a long period of uncertainty and austerity. However, the coronavirus pandemic has disrupted financial markets and global economies, bringing new and more pressing challenges to the doorstep of 11 Downing Street.
In the anticipated 2020 Spring Budget on 11 March, Sunak announced a £30 billion package to boost the economy, with around £12 billion specifically designed to combat the impact of Covid-19 on businesses and consumers alike.
The relief package has already been rendered inadequate and more reforms have been announced to provide the necessary financial relief to companies.
But more generally, the 2020 Spring Budget saw a change of tact from the Conservative Party, with Boris Johnson and his chancellor evidently willing to borrow heavily in the current low interest rate climate in order to invest into public services and infrastructure.
Sunak said that £600 billion will be spent on roads, rail, broadband and housing over the next five years. Assuming this figure is adhered to and well spent, the investment will boost regional property markets and local economies.
Elsewhere, the expected stamp duty surcharge for international buyers of UK property was unveiled. However, the surcharge rate is 2%, rather than the 3% most were expecting, and it will not come into force until April 2021.
London property prices rising
Amidst all this news, the property market in the capital continues to perform well.
In the week following the budget, Rightmove released its monthly house price index. It showed that the average price of a home in London is now £639,000, which represents an annual increase of 5.1%. The price rise is attributed to the fact that demand still notably outstrips supply in the capital.
Predicting how the spread of Covid-19 will impact the property market is extremely difficult. But the long-term performance of real estate as an asset―its ability to withstand economic turbulence and achieve capital growth over longer periods―could ensure stability and continuing demand within the market.
The coming months will undoubtedly be a testing time for businesses, consumers and investors. But Butterfield Mortgages Limited remains very much open for business; we are committed to supporting clients during this time and ensuring people can access mortgages for prime property purchases.