ONE MAN’S VIEW - HARVEY M. SONING, FRICS
Property comes in many guises so when asked whether property is a barometer of the UK economy, there are many answers. What is undoubtedly true is that confidence drives the property market and the UK’s population’s confidence is often underpinned by how the residential market is performing. The short-lived premiership of Liz Truss undermined the financial markets confidence, and the succession of interest rate increases that has followed has dented the confidence of the public.
The unintended consequences of the rate increases designed to control inflation has been to bring into question the financial stability of the banking sector which remains exposed to the property market, not helped by recent events in the USA and Swiss financial sector. Stress tests run annually by the PRA suggest the UK banks should cope with the problems but inevitably interest rate increases affect both owners and occupiers and there will be casualties. Unlike 2008, a small number of casualties should not lead to contagion and one person’s failure is another’s opportunity.