The outcome of the recent US presidential election is anticipated to have significant implications for the UK real estate market, particularly in light of the candidates' differing policies and their potential effects on economic stability and foreign investment.
Impact of Donald Trump’s Presidency
- Market Volatility and Investment Shifts: If Donald Trump secures a second term, experts predict increased volatility in global markets, particularly affecting the dollar’s strength. This could lead to a “flight to safety,” with investors turning to tangible assets like prime London property, which is historically seen as a safe haven during turbulent times. The London property market could see an influx of foreign investment as individuals seek stability amidst political uncertainty in the US.
According to London Central Portfolio there will be a net positive impact on the market as “investors retrench to blue-chip tangible assets as uncertainty on the political and economic stage is heightened once again”.
It said: “Jitters in global equity markets driven by widespread speculation will be countered by flights to safety, with gold, the Yen and Swiss Franc set to benefit. Whilst the result will likely move the global spotlight away from Brexit, repercussions may be felt across Europe with the prospect of anti-establishment votes becoming keener. At the same time, the likelihood of the UK Parliament thwarting the people’s mandate to exit the EU has dwindled.
“Whilst all of this plays out, Prime Central London property, a traditional safe haven, is expected to benefit from a similar flight to quality, asset-backed investments.”
Camilla Dell, Managing Partner at independent property buying agency, Black Brick, said investment in the London property market is set to increase.
She said: “Following the victory of Donald Trump in the US election, we will almost certainly see market turmoil and weakening of the dollar. As a result, global investment into Prime Central London (PCL) property is likely to increase from investors who hold the view that Trump is risky for the markets. Indeed, we are already seeing a flight to safe haven assets such as gold this morning and PCL property has always been seen as a safe haven asset in turbulent times.
“We are also likely to see some wealthy US citizens, particularly those most offended by Trump, move to the UK as some of our American clients hinted to us prior to this outcome. Foreign buyers, particularly those from the Middle East and of Muslim faith, may enter the London property market, too, as they decide not to buy property in the US due to his remarks about banning Muslims from entering the country.
2. Foreign Investment Dynamics: Trump’s presidency may deter some foreign investments due to his administration’s focus on deregulation and potential trade conflicts. However, it could also attract investors from regions disillusioned by his policies, particularly wealthy individuals from the US looking to relocate due to dissatisfaction with domestic politics. The weakening dollar might make UK properties more affordable for American buyers, potentially increasing their interest in high-end London real estate.
3. Long-term Market Predictions: Analysts suggest that while immediate reactions may favor prime central London properties, the broader UK housing market could face challenges if Trump’s policies lead to economic instability or trade tensions that affect the UK’s export-driven economy.
Impact of Kamala Harris’s Presidency
- Stability and Predictable Investments: Should Kamala Harris win, her administration is expected to foster greater stability in international markets. This could enhance investor confidence and encourage a more predictable flow of foreign capital into the UK property market. A stable currency exchange rate would likely bolster demand for UK properties, especially those with strong sustainability credentials.
- Increased Demand for Sustainable Properties: Harris’s focus on environmental issues may shift investor preferences towards properties that meet higher sustainability standards. This could lead to a rise in demand for eco-friendly developments within the UK, aligning with broader global trends towards sustainability in real estate.
- Potential Challenges for Foreign Buyers: While a Harris presidency might stabilize markets, it could also lead to increased pressure on European allies regarding defense spending and economic contributions, which might indirectly affect the UK’s fiscal environment and housing policies.
The future of the UK real estate market appears closely tied to the political landscape in the US. A Trump presidency may lead to short-term gains in luxury property investments due to market volatility and a flight to safety, while a Harris presidency could promote long-term stability and growth in sustainable property sectors. Stakeholders in the UK housing market will need to remain vigilant about these developments as they unfold.