The View from Berkeley Square – The Property Chronicle
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The View from Berkeley Square My latest thoughts on the outcome of the UK general election

Investor's Notebook

Big Ben and Houses of Parliament in London, UK

Two months ago the view from Berkeley Square was cautious, particularly on Brexit and retail, but one could see ‘clear blue water’ (even if bitter tasting!). After a disastrous Tory manifesto and even worse campaign, the waters are muddied and in Kensington Gardens turning red! It’s hard to imagine a more challenging outcome for property investment and for intermediaries. The problem now for property markets in the UK is the uncertainty. This new Tory/DUP government could break down at any moment, but even if the coalition staggers on for two years until the Brexit deal (or no deal) becomes clear, it is the political uncertainty which will affect property markets.

The UK consumer?

Post the EU referendum, the UK consumer was remarkably resilient, based on low interest rates and low unemployment, assisted by weaker sterling. The home-builders are a good barometer, and after a few days of low activity after the referendum result, levels of viewings and sales of new housing bounced back strongly. Consumers surely now need to be more cautious on job prospects, the cost of borrowing, and potentially higher taxes, particularly at the higher end of the housing market where activity is already weakened by the effects of stamp duty. The sad irony is both Labour and the Tories pledged to build a million new homes, which now looks an impossible target. The higher end of the second-hand market will be the worst affected, making downsizing more difficult (in spite of the compelling demographic demand for all forms of retirement living). The lower end of the new build market (the 200k-250k) should remain active but very reliant on Help to Buy. There needs to be clarity on whether this policy will be extended, or if a termination date is set, how it would be phased out – otherwise there’s a potential cliff edge here.

Investor's Notebook

About Robert Fowlds

Robert Fowlds

Robert Fowlds retired from investment banking in 2015 as Head of Real Estate Investment Banking for JP Morgan Cazenove. In 10 years Robert led or co-led around 60 public market transactions including IPOs, equity raises and M&A. Prior to corporate finance, Robert was Co-Head of Real Estate Equity Research at Merrill Lynch, and previously Kleinwort Benson, where his team was #1 ranked in the Extel and Institutional Investor Surveys for 11 years. Robert's early career was as a chartered surveyor.

Articles by Robert Fowlds

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