The seventh edition of The London Intelligence shines a light on several causes for concern. Job growth has continued, unemployment is falling and take-up of office space has remained steady. However, with only a few weeks remaining until Britain is due to leave the European Union, business activity has slowed, and business confidence has plummeted.
Brexit uncertainty has affected the housing market too, as average house prices rose by only 0.8 per cent in the year to October 2018. Although the number of first-time buyers in London was at its highest since 2015, transaction volumes fell by 18 per cent over the year, with fewer people looking to buy or sell overall. Many commentators predict that ongoing uncertainty will lead to continued stagnation.
After a period of decline, rents have levelled out and begun to grow again, particularly for larger properties. As a result, the average proportion of income spent on rent has also increased, to 31.5 per cent – the highest it has been for four years. At the same time, renters are getting younger: the average age of London tenants today is 32 compared to 34 in 2015.
Lack of confidence is also affecting the delivery of new housing. New build starts were down 7 per cent in the year to Q3 2018, while net additional dwellings for 2017/18 fell to 32,000 – below half the level stipulated by the draft new London Plan. The number of approved planning applications declined for both major and minor schemes, which may signal a worrying longer-term slowdown in activity.
Unsurprisingly, Brexit remains Londoners’ top concern, rising by 13 per cent in the last quarter of 2018. The approaching deadline for leaving the European Union may also be slowing arrivals by tourists and workers, although visitor numbers picked up over the summer. The government and Parliament must make progress on a withdrawal agreement or risk a significant economic downturn.