Post-referendum pessimism may have beset many, but the fall in the pound has created unanticipated profit jumps for exporters and caused badly needed foreign investment to roll in to the coffers.
Economic forecasting is a tricky business at the best of times. After such a long recession, many of us are guilty of looking for the glimmers at the end of the tunnel to the exclusion of everything else. Don’t get me wrong, there are a great deal of positive signs – headline rents rising, house prices holding firm and lenders with money to lend. Indeed, the Bank of England’s stress test has also shown the banks to be ‘materially’ more resilient than they were when the ‘bad times’ came a-knocking several years ago. Nevertheless, the Bank of England’s warning; that we must remember that the foreign property investment comes as a result of an ailing pound, is a very necessary reality check for a sector that is casting around for encouragement.
“There is a risk of further adjustment in the commercial real estate market that could create financial stability risks, given the reliance of the market on inflows of foreign capital and, in some segments, stretched valuations,” it said.