Home Economy The Political Elite Influencing the Real Estate Industry

The Political Elite Influencing the Real Estate Industry

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house floating on lifebuoy
House in lifebuoy. Property insurance concept

Why Are London’s Property Prices Still Rising?

In the aftermath of the Brexit, politicians expected the housing market in the United Kingdom to collapse. Now, 2 months in that has still not happened. The economic fallout from Britain’s decision to break from the Eurozone has not yet come to pass. And yet, politicians continue to wield tremendous power in the real estate industry. Their sentiments sway voters and impact on buying/selling behaviour. London is a unique case in that prices in the city tend to appreciate rather than depreciate based on current economic realities. Outside of the metropolitan area, housing prices have not risen nearly as much.

eurocheddar real estate graph
Gross value added (GVA) of the real estate sector in the United Kingdom (UK) from 2008 to 2014 (in million GBP)* (source: statista)

London house prices are affected by demand for safe-haven real estate emanating in South Asia, Russia, the Middle East, China and parts of Europe. Since London is a multicultural melting pot, it is easy to understand the appeal of the city when it is divided into what is known as electoral wards. Each of these ‘wards’ has a unique appeal with individual countries around the world. This information has been confirmed by the Nationwide Building Society, The Land Registry and the Office of National Statistics. In the UK, the Bank of England recently moved to cut the bank rate to 0.25%. This economically-driven move is geared towards making property ownership more affordable.

Political Figures Influence the Real Estate Spectrum

A classic case of people holding political office impacting on the real estate industry is former Chancellor of the Exchequer, George Osborne. He cautioned that housing prices in the UK would collapse if Britain voted for a Brexit. His words swayed opinion in the political arena, despite his assertions not coming to pass. The political impact on the real estate industry is well documented. These trends manifest when government imposes taxes on real estate, enforces regulations on the rental industry, or simply makes it more/less conducive for real estate growth.

Government Can Advance the Real Estate Industry or Degrade It

Government has an active part to play in the real estate market. It does this by way of tax credits, subsidies and deductions. These government incentives have an ability to impact on demand for real estate while they are in place. A classic case in point is a first homeowner’s tax credit. Of course, influential business people also have an ability to ‘direct’ the real estate market. They do this by dint of their power and influence. Sometimes, government can operate in the opposite direction by targeting powerful business people, thereby degrading the viability of the real estate industry. The political map is peppered with powerful business people who were involved in politics and able to influence the real estate market.

 
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William R. Feins , freelance journalist from London, UK; he received his B.A. degree in Economics and his Masters in Sociology. William has always been interested in the mechanics of business and the inspiration of original thinkers, and firmly believes that the former can’t succeed without the latter. In his spare time, he enjoys the ridiculous spectacle of watching table tennis on a big screen (preferably at a pub) and reading weighty tomes about World War II.

11 COMMENTS

  1. It is a good thing that government can affect industries, however, this might lead to some economical disasters. Some powerful politicians, who has relation with real estate industry, could use their power for their (or their partners) benefits. And this really can hurt the real estate business.

     
  2. Throughout history, many markets including real estate, has been influenced by government decisions as well as the super rich. It’s important to have a free market and to eliminate monopolies that take advantage of events that occur.

     
  3. BlackRock’s real estate analysts predict the UK commercial property values could drop by as much as 10% over the next year due to declines in London. Another analyst Mike Prew, with Jefferies LLC, estimated that international business could move as many as 100,000 jobs out of the UK and that London office rents could fall 18% within two years of Article 50 being activated.

     
  4. Nice article about the political elite influencing the real estate industry. But political elite influenced every industry in the world.

     
  5. London is becoming like the United States, in the way they do their politics. real estate prics are rising and Government is taking control of everything. Leaning towards socialism.

     
  6. I think the articles about the political and london, come to show you how the world is changing and london is a big town that taking control in the industry.

     
  7. London is also a very desirable place to live. In a major city with government backing through tax credits and more, I would be surprised to see prices fall much when they do finally go down.

     
  8. Too many oligarchs are coming in from Russia and driving up prices. There need to be more regulations that stop these foreigners from making life in London unaffordable. The rent is way too high.

     
  9. The article is trying to prove the point that Brexit has had little impact in the real estate market. But its been long time nothing change. London is so crowded and people are used to so i do not think so people will move somewhere else. I hope government will bring a new packages for the people who can not afforded at London property.

     

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