A succinct weekly take on the London property market and a roundup of headlines from market observer John Lim. Subscribe to the Friday Roundup here: http://pbra.in/1Gli7UL
- The pound made headlines after plunging 6% in two minutes this morning, before quickly recovering most of its losses within half an hour.
- The two-minute flash crash coincided with a story on the Financial Times about French president Francois Hollande taking a tough stance on Brexit. Some have attributed the crash to a computerised chain reaction, while others have blamed a “fat finger” error by a trader.
- The pound is now officially the worst-performing major currency in 2016, down 14pc since the start of June, the month of the Brexit vote. Taking a longer-term view, it has fallen 36pc over the past decade, pointing to a fundamental revaluation rather than just a temporary shock.
- Many have attributed the current pressure on the pound to Theresa May’s speech at the Conservative party’s annual conference, which dropped several hints that she was ready to surrender membership of the single market in return for more power over immigration, law-making and the budget – a “hard Brexit”.
- The pound also weakened earlier in the week when May stated during a BBC interview that she looked to trigger Article 50 by March next year, which set a firm deadline and dashed the hopes of some for a “wishy-washy” process.
- Looking across the other side of the table, EU President Donald Tusk has adopted a neutral position, saying that negotiations would only begin once Article 50 is triggered.
- Going forward, we should expect more aggressive posturing from the likes of Germany and France. The UK will set a precedent for other countries considering leaving the EU, and an easy exit would threaten the EU’s very existence.
- How will this affect the currency in the short-term? Many expect more volatility as negotiations continue, for example, Goldman Sachs predicts another 5pc fall in the pound against the dollar, taking sterling to $1.20.
Here’s a roundup of what we think are the big news stories this week:
- Sadiq Khan is to launch a comprehensive inquiry into the impact of foreign investment in London’s housing market over concerns of foreign investors distorting the housing market.
- The amount of stamp duty collected on house sales in London rose by £340m in 2015-16, according to HMRC data.
- The Royal Institute of Chartered Surveyors reports that 86% of landlords say they have no plans to increase rental portfolio this year, and predicts a critical rental shortage through to 2025.
- The Telegraph reports that overseas investors, attracted by the fallen sterling, accounted for 78pc of commercial property bought in Central London over last three months.
- Chancellor Philip Hammond has pledged to borrow £2bn and ease some planning paths to boost housebuilding.
- Investment in London property fell by 36% over the 12 months to June, despite global property investment rising 0.5% in the same period, according to Cushman & Wakefield
- A three-bedroom flat in Maida Vale for sale has gained online notoriety after the ad was posted on online community Reddit, with users mocking its tiny dining room: