The graph below tells you all you need to know about how a recession affects the property market in the capital.
The graph details the number of private units under construction since 2005 – note the first peak in 2007 and what the effect of the recession had on house building in the following years.
By 2009 the 2007 peak had been cut in half. In the space of a mere two years we had gone from a total of 25,000 units under construction to a mere 12,500 under construction. However, little did we know in those dark days how strong the recovery would be.
At the end of 2015 the number of units under construction at year end was over 47,000, nearly double the 2007 peak. Due in large part to an ever improving and stable economy. The number of units under construction at the end of 2015 was the highest we have ever witnessed, but the higher the rise the longer the fall.
The UK has voted to leave the EU. Whatever your thoughts on that, one thing is certain, the future is uncertain. The construction industry is not only based on foundations made of concrete and stone it is an industry that needs the foundation of economic stability as well.
Negotiating the terms of Brexit could take years, years in which no one is sure of the final deal that will be hammered out, years in which the aftershock of today’s decision will still be felt in the very foundations of the industry itself.
Nigel Evans, head of London Residential Research/EGi
