The property market tends to thrive when the economy is strong and stable. Historically, economic uncertainty has negatively impacted house buying and selling, as people tend not to make big life changes and new investments when job security, the cost of living and political decisions are up in the air.
However, today we’re finding that economic shocks aren’t having the same effect on the property market as they used to – and perhaps that’s partly because we’ve become more accustomed to them. Over the last 10 years, we’ve had Brexit, the pandemic, the war in Ukraine, political upheaval across Europe and some controversial changes in leadership in the UK, and yet the property market has remained relatively stable. Price growth has been positive, landlords are seeing good rental returns, and the number of annual property transactions has held fairly steady.
The property market is more secure in itself than it was 20 years ago:
So, how much impact has the latest ‘shock’ of the various actions taken by Donald Trump in the first months of his presidency had on Britain?
His decision to impose tariffs on goods imported by the USA from the rest of the world has probably had the most wide-reaching consequences, although at the time of writing the UK appears to have got off relatively lightly. Any company exporting goods to the United States now has to pay an extra charge, which varies according to the country and type of goods, increasing costs for manufacturers and exporters. It also impacts prices for consumers, demand for those goods and jobs for workers in the most affected industries.
Towns and cities where car and steel manufacturing are a major part of the local economy are experiencing considerable uncertainty and the prospect of the highest tariffs. Coventry and Derby are at the top of this list, with around 20% of their total exports currently going to the USA.
The good news though is that our economy in general is in good shape, with the latest figures from the Office for National Statistics (ONS), showing that real GDP grew by 0.7% in the first quarter of the year, mainly because of growth in the service sector. And the UK is likely to remain resilient, for several reasons:
Finally, confidence in the future of the economy is still reasonable. One of the key things that affects both the economy and property is interest rates – the lower they are, the more affordable it is for people to borrow, make investments and move. And, although projections have been adjusted down slightly, to allow for some ripples from President Trump’s decisions the Bank of England reduced base rates in May, to 4.25%.
Expectations are now for the base rate to fall as far as 3.75% according to some forecasters by the end of 2025 and settle around 3% through to 2028. Mortgage interest rates are likely to follow suit, meaning borrowing should become cheaper over the next few years, which should help affordability to return to normal and keep the property market moving.
Kevin Shaw is national sales managing director at Leaders (an LRG company).
Read the orginal article: https://propertyindustryeye.com/what-impact-will-president-trump-have-on-the-uk-property-market/
