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Oct 7 2016

London is the place for me

The conservative conference has been humming along this week, and various snippets may have reached your attention. In particular, Theresa May made the announcement that the government would be triggering article 50 no later than March of 2017. This follows month of silence on how to deal with the referendum result, so at least now a timetable is in place, which does go some way to reducing uncertainty.

The FTSE 100 index has rallied, and early in the week broke through the 7,000 point mark, approaching record highs. The pound, in contrast, has continued to take a hit, and Phillip Hammond’s not so reassuring warnings of a “rollercoaster” of an economy can’t do much to help. It was my opinion that the UK would initially be poorer outside of the EU, and the signs do point this way. Having said that the economy is showing resilience; Tim Moore, senior economist at IHS Markit said, "Resilient housing market conditions and a renewed upturn in civil engineering activity helped to drive an overall improvement in construction output volumes for the first time since the EU referendum."

Whilst it is true to say the weak pound is an issue, our export industry and investment in UK businesses may actually benefit from outside investors taking advantage of a favourable exchange rate; in the UK, your money will go further. For those buying and selling property in the UK, the weak pound shouldn’t play much of a role, since the transaction will be domestic, not requiring any change of currency.

The supply and demand equation of London property does mean it is likely that house prices are going to be robust, but it should also be considered that this slow-down in prices may present an ideal opportunity to buy. As Lord Kitchener said “London is the place for me”, and there’s a distinct possibility that foreign investors may look to take advantage of the favourable weaker position of the pound to acquire property in the London area, if this is the case, prices will likely take an upwards hike.

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