Think 2016 was volatile? You ain’t seen nothing yet
Never has crystal ball gazing been so fiendishly difficult. The dense fog hanging over the political and economic landscape has made it nigh-on impossible to see ahead with any clarity, certainly not beyond three months when Article 50 will (presumably) have been triggered by Theresa May.
That hasn’t stopped leading lights of the property world speculating on what could happen in 2017 in what is inevitably Property Week’s most mixed and thought-provoking forecast of recent years. The mood is predictably pretty bullish among Brexiteers and stoically pragmatic - or simply punch-drunk - among remainers.
But while it is an admirable industry trait that you all tend to keep your heads while those about you are losing theirs, I’m afraid trying to muddle through in the expectation of jam tomorrow ain’t gonna work.
To put it bluntly, the London-centric, business-centric - and dare I say it elitist - view that the Brexit vote was motivated primarily by a desire to regain sovereignty, slash Brussels red tape and jettison old for vastly improved international trade deals is deluded.
For a decent chunk of the population, it wasn’t about getting out of Europe, it was about getting Europeans - and all foreign ‘undesirables’ for that matter - out of the UK. Don’t believe me? Watch BBC2 comedy sketch show Revolting, in which prankster ‘Dennis Pound’ canvasses the Essex public for new UKIP policies and elicits genuine calls for hanging to be brought back for immigrant rapists.
Make no mistake, people will be baying for blood if May doesn’t deliver on her promise to control immigration, whether there are more starter homes or not (and let’s be honest, the government is way off its 2020 target of 200,000).
Extremely long tunnel
The mood is going to become even more tense when they realise their initial spending bravado after ‘retaking control’ last June is about to be curtailed by price inflation in the shops, with high-street bellwether Next predicting the price of clothing will rise by 5% following the fall in the value of the pound and former Sainsbury’s boss Justin King recently forecasting a similar hike in the price of groceries.
What impact will all this have on the UK property industry? Not much on the fundamentals, which remain sound, but the seismic national and global economic and political changes afoot do not exactly present a conducive backdrop to strong growth and sectors such as the London office market and housing are going to struggle - even if there are upsides for other sectors such as industrial.
As Sir Ivan Rogers made clear this week when he quit as UK ambassador to the EU ahead of Brexit talks, that particular tunnel - light at the end or no - is likely to be extremely long. In his parting note to staff, he urged them to “challenge ill-founded arguments and muddled thinking”.
The industry needs to do the same and stop blindly assuming that some sort of trading utopia lies ahead. May is dreaming if she thinks the UK is going to get an easy ride from the EU just because it wants us to continue buying German cars - and so are we. To bastardise the opening line of The Go-Between, the future is a foreign country: they’ll do things differently there.