Outside London, Property Might Survive the Road to Brexit

(Bloomberg Gadfly) -- London's housing market has had a glorious run. That's been unwinding since the Brexit vote -- you can blame unaffordable prices mixed with political uncertainty.

The bad news deepened on Monday, as Rightmove Plc published estimates that asking prices for London’s top-tier homes will fall 2 percent in 2018.

But a closer look shows that the news isn't glum for everyone. For the country as a whole, Rightmove sees asking prices picking up by 1 percent. For entry-level properties, the gain could be 3 percent.

While pricier property has faltered, the rest of the country has coasted along, especially in the lower- and mid-priced segments of the market.

Though political uncertainty persists, and consumers are getting squeezed by faster inflation and sluggish wage growth, the British housing market outside the capital might just survive the road to Brexit.

A third quarter survey by the Bank of England found lenders expect credit conditions for house buyers to remain fairly stable. 

And the BOE forecasts growth in real household income next year, however modest.

Though inflation data for November published Tuesday showed the rate broke the central bank's 3 percent upper limit for the first time since 2012, it should turn downward. This will help support a rebound in household confidence next year, according to Kallum Pickering, an economist at Berenberg Bank.

All of this should support demand for property. Though the bank's survey of lenders didn't account for the quarter-point rate increase in November, it's hard to see that small amount of tightening being the decisive factor in keeping people from buying. 

So, barring drastic news, British property outside the capital should continue to weather what’s coming at it. 

London is another story.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Elaine He is Bloomberg Gadfly's data visualization columnist in Europe, focusing on business and markets coverage. Before joining Bloomberg, she was a graphics editor at the Wall Street Journal and the New York Times.

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