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We Have a New Prime Minster

We have a new Prime Minster.  Mrs May along with her ever growing cabinet have the large task of steadying the ship and directing the UK through turbulent times and, I’m sure, even more turbulent Brexit negation’s in Europe.  

We are three weeks from the Brexit decision and a huge amount of politics has entailed.  The financial markets have returned to more orderly operations after initial shocks.  However, those involved in rural property are still uncertain of the true effects of Brexit and how things will change in the near future.  The full impacts of Brexit are yet to be understood, But we do know that there is a strong link between the property market and the strength of the economy.  It is anticipated that consumer confidence and big business decisions/deals will decrease over the negations. 

Already I have observed a decrease in rural market activity as investors, be it farmers or speculative investors are holding on to see what happens as they expect values to decrease.  Land values had already stagnated and decreased in places across the UK before Brexit.  Now with Sterling in a weaker position on world markets oil and other imported commodities that are dealt in US Dollars will become more expensive.  Over time the UK will most probably see rising inflation levels due to the weak Pound.  However, the weak Pound will mean UK exports will be cheaper for overseas purchasers.  If Sterling remains weak for a good while, UK industry and farming may well benefit dramatically.  UK farmland values are expected to fall, but with a weaker Pound, farmland should not fall in value so drastically as business will continue.  However, not all farming entails selling products overseas and these farms could be worse hit.  

There is still a huge demand for housing and the new Prime Minister made this abundantly clear in her first speech as Prime Minster yesterday evening.  However, the Governor of the Bank of England has signalled that he and the MPC will be reducing the interest rate to 0.25% in a bid to further encourage spending.  Not only this, the cost of borrowing will become cheaper which could aid the further development of new homes and the stagnation in the housing market.  Contrary to this, housing market activity is slowing with people not willing to make the large investments in uncertain times especially after experts are predicting that house prices will fall.

Author: Woolley
Published on: Friday, July 15th, 2016

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