A New Politics of Space


With less than a year to go before we bow out of the EU, we might be forgiven for indulging in a little circumspection when it comes to property investment, at least until the break-up pangs start to fade and a newly divorced Britain reveals itself in all its Bregret glory. It’s nearly two years since the leave vote – yet it appears as if few in-out demarcation wounds have healed. Lib Dem leader, Vince Cable recently reflected that leave voters were being driven by a nostalgia for a world where ‘passports were blue, and the map was coloured imperial pink.’ But the continuing combative radio phone-ins, polemical TV debates and factious social media feeds, have illustrated how deep the schism in our society still is.

For the UK property industry – there’s much at stake. Britain’s biggest housebuilder, Barratt states that without low-cost EU loans and vital building workers, we’re going to count the cost in terms of UK homes. Lord Stunell, who is conducting a review into the impact of leaving the EU upon construction, says the industry needs to increase its capacity by 35% to meet infrastructure and housebuilding needs, but is instead likely to shrink thanks to the end of free movement and the loss of open access to the single market.

A flight of equity is also sucking momentum out of house prices. In London –  long the ‘alpha’ hotspot for foreign investors behind a decade of high altitude prices – the difference will be most stark. Next year, house prices will rise 0.9% in London and 2% nationally, but still below the 2.1% expected inflation rate. In 2020, London prices are predicted to increase 2%, trailing the national picture at 2.3%.

Beyond Brexit however, healthier influences are quietly colluding behind-the-scenes to restore some semblance of order to property proceedings. Respite from inflated capital boosts over the next five to 10-year cycle is a big ask – yet seemingly not an impossible one, if industry forecasters are to be believed.

Stirring this quiet rebellion is a hankering for a new politics of space; a fresh-faced real estate landscape that will give less strength to the drivers of higher house prices and greater weight to the drags on prices. Many of the housing market boosts we’ve seen in the recent past, such as an expanding population, low interest rates, previous affordability relative to incomes and the escalation of housing as a lifetime investment, are already losing their potency, with house prices balancing to meet the actual needs of house buyers and a fresh wave of value drivers – notably economic and social migration shifts.

And it’s not just the UK embracing a new dawn. Transition ripples are spreading through keynote cities in North America such as San Francisco, New York and Vancouver, and European cities including Berlin and Barcelona. As to UK locations expected to perform particularly well in this reality reshuffle? Larger metropolitan centres across the UK, with strengthening sales prices and rental demand as the rise and rise of city centre living continues. Embracing this divergence will not only help maximise national economic potential, deliver jobs and opportunity for the entire country, but will help retain our competitive advantage on the global stage. It goes without saying - but that’s a strategy worthy of acknowledgment as we prepare to go it alone.

Until next time.


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