We are told Britain’s vote to leave the European Union has undermined confidence among U.K. consumers and increased worries about their finances and property values. That’s curbing demand for housing, though a worsening supply picture is proving some support to prices, according to RICS. New sales listings are falling at a record pace, it said. This may be true in the South East but not so in the Black Country and Worcestershire.
With the return of political stability following the resignation of David Cameron on June 24 this is bringing a measure of optimism to the housing market. Prospective buyers received a boost last week when the Bank of England cut borrowing costs. The RICS (Royal Institution of Chartered Surveyors) said the outlook for the housing market appears brighter, with 12-month price expectations rising to 23 in July from zero in June. “Confidence remains more resilient than might have been anticipated,” said RICS Chief Economist Simon Rubinsohn. “The data are consistent with the notion that, helped by a rapid resolution of the political vacuum, the initial shock and uncertainty surrounding the Brexit vote has begun to recede..
It will be some time until we understand the full impact of the Brexit decision, but the Bank of England’s base rate cut and more quantitative easing are likely to be supplemented by a similarly supportive fiscal stance in the autumn.”
Activity in the commercial real estate sector had been materially affected by the referendum result, with the investment market in London particularly weak, again more locally we have seen a continuance of activity with some newly marketed property being sold within the first few weeks of going on the market. In July we had a record number of property enquiries backed up with one of our most successful months of sales and lettings. Commercial rents remained stable with some upward pressure on capital values as the supply of good commercial property diminishes.
Business output nationally, reflecting companies’ experience of orders for the three months ahead, now sits slightly lower on the previous month at 98.2, down from 99.0. At the same time business optimism, which predicts growth six months ahead, has fallen from 98.9 to 97.9. These lie approximately mid-way between the 95.0 mark on the indices – below which lies possible recessionary conditions – and 100.0 – which correlates to the UK’s trend growth rate of just over 2%. So, while there is a definite and continued decline in the confidence of UK business people nationally this is not so locally and the latest drops are not yet as dramatic as may have been predicted. This suggests that the initial impact of the Brexit vote has been less severe than expected.
So far Brexit is not having a negative effect in the Worcestershire commercial property market despite the national press talking about uncertainties with commercial property funds, this has little bearing on the our regional property market which deals principally with smaller companies, local investors and owner occupiers.
In fact the referendum decision is actually helping the local market, with a cut in interest rates, the willingness of Banks to lend on Commercial property acquisition, funding available from pension resources and the relative shortage of good commercial property.
In our neighboring city which looks a bit like a warzone with demolition ever where making way for much anticipated grade A office development to meet the growing demand for space in Birmingham’s expanding business quarter around the bottom of Broad Street and Chamberlain Square – the most noticeable ones being the old Central Library and the former NatWest tower in Colmore Row. A definite feeling of a buzz is palpable in the streets, let’s hope this excitement continues to spread out to our area and beyond into Worcestershire.
Worcestershire Local Enterprise Partnership has recently submitted a bid for an extra £35 million to support the County’s economy.
The bid is for the next round of the Government’s Growth Deal funding with the Worcestershire LEP having already secured £54.2 million in previous funding rounds to support economic growth in the County.
Gary Woodman, Chief Executive of the Worcestershire Local Enterprise Partnership, said: “We know that this is a funding stream which is oversubscribed many times over, however, we believe we have a compelling case for an additional £35 million due to our current successes and have submitted an ambitious Growth Deal 3 bid for Worcestershire.
So all in all it is a good time to look at buying or selling commercial property, good investor demand fueled by business growth and fund availability makes it the right time to consider the options.