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.
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.