First there was a vote for Brexit, then there was a Trump victory. Both shocked the world but what does the US election outcome mean for the UK property landscape?
If not many people saw the vote for Brexit coming, even fewer people saw a Donald Trump Presidency coming.
Stock markets wobbled in the immediate aftermath of the American election, just as they did in June after the vote for Brexit. But they quickly rallied and, although some investors took flight to safe-haven refuges such as gold, there has been no prevailing sense of panic. Investors who have been biding their time until the ramifications of a vote for Brexit become clear, are now sitting on their hands again until more is known about how Mr Trump will conduct himself in the White House after his inauguration in January.
It is a cliché to say that markets hate uncertainty, but it is a cliché that can sometimes be overstated. How much has the vote for Brexit, and all the attendant uncertainty, really harmed the UK housing market? Prices at the top end of the market may have fallen this autumn but was that because of the vote for Brexit or, more plausibly, because of the hefty hikes in stamp duty imposed by George Osborne in April?
And how will Mr Trump’s shock victory impact the UK property market? It depends, in part, on how many investors decide that a Donald Trump America is not for them. Before they went to the polls, 28 per cent of Americans, in one survey, said they would consider leaving the States if the billionaire property mogul was elected President. But how many of them will actually carry out that threat when push comes to shove? They will get more bang for their buck than a year ago, if they do decide to move to London, given the 10 per cent fall of the pound against the dollar in the wake of the vote for Brexit. And prime central London property has always been seen as a safe-haven asset in turbulent times.
Some analysts have suggested that any boost is likely only to involve central London, with Nine Elms in Battersea – also the home of the new US embassy – as a possible site for disillusioned Americans looking to relocate.
“It is possible that things will change after Trump’s victory,” says Stephanie McMahon, Head of Research at Strutt & Parker. “But only 2 to 3.5 per cent of our prime central London buyers currently come from North America, so they are not a significant part of the market.”
Other potential overseas investors in London may take a different view. To take one example, buyers of Muslim faith from the Middle East will have taken offence at Mr Trump’s pre-election rhetoric and, in particular, his threat to subject Muslims to ‘extreme vetting’ or ban them altogether from entering America.
Some of the President-elect’s more belligerent campaign rhetoric has raised fears of a trade war with China and a global recession.
One thing on which all are agreed is that with Donald Trump in the White House, 2017 is likely going to be a volatile year. “It is impossible to know how a Trump government might affect the global economy and, in turn, the London housing market,” admits Jonathan Hewlett, Head of Savills London.
In theory, given his business background, the 45th President of the United States should understand the operations of the world property market better than many of his predecessors. But will his expertise prove to be of benefit to homeowners in the UK? After the political quakes of 2016 on both sides of the Atlantic, nobody will be making New Year predictions with much confidence.
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