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The UK Housing Market: Post-Brexit
One of the conundrums of EU membership for the UK has been the mass influx of people from the continent since 1993, but especially from 1998-onward. Some 8-million immigrants now call the UK home — of which 3.3-million are EU citizens who moved to the UK to work or study.
Suddenly dumping 8-million people (or even 3.3-million Europeans) into a country puts an unprecedented strain on the country’s housing market. Since 1993, property prices in the UK have risen to become some of the highest priced property on the planet sometimes pushing native Britons aside and into high-priced rental accommodations.
Although these mass migrations began in 1993 when the UK joined the EU (bereft of any referendum) the population of the UK had been holding near 57.7-million with almost no annual growth in the UK population. In recent weeks the population of the UK has surpassed 66-million. It’s easy to see from this calculation that the UK-born population only increased by 1-million from 1993-2018, while the balance of the country’s population increase (8-million) occurred as a result of immigration.
Therefore, is it any wonder that house prices are expected to fall once Brexit occurs and the UK government is again in charge of how many immigrants it lets into the country? Certainly the demand for housing and services will fall to equilibrium levels as supply once again approximates demand.
Is it Possible to Determine Housing Policy Before Immigration Policy is Decided?
In a word, no.
As long as unrestricted immigration continues any housing policy is doomed to fail no matter how well-intentioned. When numbers of immigrants rise or fall by the hundreds of thousands per year trying to fine-tune the UK’s housing policy is impossible.
The same holds true during the 2-year Brexit implementation period; Immigrants living in the UK may decide to return to their countries of origin at a rate the UK government won’t realize until well after it has occurred.
Assuming the government places a cap on immigration (of say, 200,000 per year) during the 2-year implementation period… it still leaves the variable of how many immigrants will leave the UK post-Brexit.
As you’ve correctly deduced from reading the above, TWO VARIABLES have been at play in the UK’s housing/immigration market since 1993. No wonder there’s been chaos!
Post-Brexit, there will only be one variable — and that one variable could still be a large factor in this equation — which is why immigration levels should continue to remain high-ish to level-out the expected crash in housing demand that will negatively impact house prices and rental rates.
In short, the UK government’s approach must be to utilize immigration levels as a lever to facilitate a stable housing market otherwise housing demand will crash and property values will fall precipitously triggering a mini-recession in the UK.
What is the Best Rate to Taper UK Immigration?
Last year, the UK allowed over 300,000 immigrants into the UK (great for UK businesses that depend on cheap labour) but it puts severe demand on housing and leads to vastly overinflated house prices.
Were the UK to drop immigration down to zero in 2020, not only would demand for new housing crash, it could also happen that large numbers of immigrants may leave the UK. How many? No one could say. It could be thousands, hundreds of thousands, or even millions.
How can you create a housing policy when your assumptions may be off by millions of people? You can’t.
Therefore, whatever changes there are to be in UK housing policy for the next 5-years, it will be best that the government make only incremental adjustments to immigration numbers, net immigration numbers, and in housing policy — adjustments that strongly adhere to whatever housing market situation develops, as it develops.
Allowing housing prices to drop precipitously (even while recognizing those prices are at present vastly overvalued and must eventually return to reasonable levels) could wreak havoc with the UK housing market, with people’s lives, and with the UK economy.
It’s a rare occurrence when policy must follow an evolving situation instead of leading it.
UK immigration policy that follows evolving housing market conditions will allow allow a gentle and ongoing reduction in the outrageous housing prices in the UK’s major cities to something approximating a normal housing market.
UK to EU: The Ball is in Your Court
Theresa May naively assumed that if she could just come up with the ‘right’ Brexit deal the EU would sign it and life would be good for citizens on both sides of the English Channel forever, and ever, and ever… (queue the dreamy music now)
Which sounds wonderful, doesn’t it? Theresa May crisscrosses Europe for two years doing political hand stands for the EU elite, comes up with a Brexit plan that works well for both sides, the good people of the UK and the EU return to their normal happy lives and the only difference is a border between the UK and the EU.
Fluffy white kittens and playful sparrows as far as the eye can see! Can you hear Vivaldi’s The Four Seasons wafting across the lavender fields towards you?
(Not me. After the EU’s failure at Salzburg, I hear music to accompany Milton’s Paradise Lost. Even the most tone-deaf can tell the difference between those tunes)
But, such was not to be. ‘Theresa May the Naive’ didn’t realize the EU never intended to get a deal. Their ‘deal’ was to break the will of Theresa May and break the indomitable spirit of the British people who dared vote against their elitist, corporatist club.
And God love Theresa May for thinking it was all about ‘getting the right deal’ instead of realizing that it was all about having to forfeit Northern Ireland, £40 billion in taxpayer cash, and every subsequent British Prime Minister kneeling before the EU politburo as part of their penance until more suitable punishment can be arranged. How medieval…
Time to Give Up on Negotiations, Theresa?
Don’t tempt her…
After using up considerable political capital (in order to cater to EU leaders) on the path towards getting a Brexit deal that works for both sides, and getting practically nowhere, Theresa May must now find herself at the crossroads — wondering what to do next.
And the simple answer is; Nothing.
Do nothing, Theresa, because no matter what you offer it won’t be good enough!
Not only are the EU in denial that the UK is leaving, they want to punish the UK and its people for leaving the union and nothing you can do will save them from their grief.
At this point, the only play left in the big diplomatic book is to stop. doing. anything. and. wait.
Not through any fault of yours — you’ve served them your best plan and it wasn’t good enough. But no matter what you served it wouldn’t have satisfied them.
The way you must play it now is to withdraw yourself from the constant ‘coming up with plans’ modality to arrange a suitable Brexit for both sides — because they have no interest in that. Why waste your time and remaining political capital?
No more traipsing around Europe trying to work with EU leaders, no more coming up with policy alternatives, no more allowing yourself to be set-up for failure!
It may take years for their hurt feelings dissipate, but as the British Prime Minister you must do what’s necessary for the UK, and in the absence of a deal with the EU, you must begin planning for a Hard Brexit on January 1, 2019.
Why January 1, 2019? Because there’s almost zero chance at a reasonable Brexit deal with the EU between now and March 29, 2019.
And every month that passes, the UK will be losing billions of pounds sterling (not only paying £8.6 billion more per year into the EU than the UK gets back, but in lost trade that could be earning the UK billions) in the meantime.
It’s not inconceivable the UK would be losing anywhere from £1 billion to £10 billion per month in lost trade each month it waits for the EU to agree a deal before March 29, 2019.
And that isn’t what responsible UK Prime Ministers do. Is it?
Responsible Prime Ministers try their best to arrange a reasonable deal and when that doesn’t work — it’s time to get back to running the country and getting out of a bad deal that’s costing the UK billions of pounds per month. ASAP.
“You’re welcome to visit me in London to discuss Brexit, but otherwise I’m busy.”
EU, the ball is in your court.
Salzburg: A Clearly-Laid Ambush for Theresa May
EU leaders had been heard praising Theresa May’s Chequers plan in recent days and no doubt, she was in fine spirits as she flew to meet EU leaders in Salzburg Austria… only to find that her well-intentioned plan was unexpectedly ripped to shreds by some of those attending.
For some observers this came as a complete surprise, but for others it seemed an obvious psychological trap for Ms. May that would undermine her credibility on the world stage and work to strengthen her rapacious cohorts in the UK House of Commons who (the EU hopes) would become more united in overthrowing her than working for the UK.
Here’s what The Times of London is saying:
“For the embattled UK government, the punishment beating meted out by the EU this week will be deeply dispiriting. Salzburg was supposed to be a moment of breakthrough, or at least progress, with the Brexit talks unlocked by Chequers. Instead, the prime minister faces the daunting task of having to reset her Brexit policy to counter an intransigent EU.” — Absurd Salzburg show proves we’re right to go
Here’s what Britons should be saying:
“Having been snookered into joining the EU in 1993 without a vote on membership, we’ve since voted to Leave (the first time we were allowed to vote on the matter) and as we’ve overpaid (subsidized) the EU budget since 1993 more than any EU country except Germany, would you mind treating us *about as well* as you treat any other significant market for your goods?”
Theresa May Keeps Jumping & the EU Says “Not High Enough”
Apparently, Theresa May jumping into the stratosphere every time the EU beckons isn’t good enough for the EU27 leaders.
The Prime Minister must be out of breath by now, Up, Down, Up, Down, Up, Down! Every two or three weeks she gets summoned before the EU Sanhedrin to explain why 17.4 million Britons decided to vote to Leave that august body — and why would she listen to British voters anyway?
Over the summer, it became something else when a number EU leaders believed they could browbeat Theresa May into delaying Brexit by telling her she should hold ‘another referendum to ensure that the British people are certain they want to Leave the illustrious EU.’
And now, it’s become something else again. It’s a game. They get Theresa May feeling hopeful that the EU has finally accepted her overly generous Chequers proposal… then they drop her off the edge of the world.
As far as negotiating tactics are concerned; Between enemies this is a perfectly legitimate machination. But for one EU country to employ it against a fellow EU country (albeit, one that’s soon to leave the EU) it is unseemly, at best. Lowbrow, at worst.
Were I Theresa May’s Chief of Staff, I would have said, “Get your stuff, we’re leaving” and flown her back to the UK myself if the pilots weren’t immediately available — without so much as informing the hotel front desk in Salzburg.
When people set you up to fail, they’re not your friends. So don’t be there.
A well-known quote: “Every day, we teach others how to treat us.” Therefore, if Theresa May continues to allow EU leaders to set her up for a fall and use tactics against her that are appropriate to use against the EU’s existential enemies only (certainly not to a fellow EU member and major contributor to the European project in the postwar era) without standing up for herself, she deserves everything she gets and I wouldn’t feel sorry for her in the least.
This *should be* the headline in today’s UK newspapers: “Theresa May shocks EU leaders by abruptly leaving Salzburg insults behind”
That’s the way you stand up for yourself. Whether I like or dislike Theresa May and her policies, we should expect EU leaders to treat the Prime Minister of the United Kingdom and British voters with a high level of respect if they want to receive the same in return.
“Every day, we teach others how to treat us.” — Remember?
Whether they realize it, or not, the EU is teaching the Prime Minister that no matter how hard she tries to create a polite Brexit, they will arbitrarily disregard her well-intentioned plans, eventually causing her to give up on the EU as an institution where goodwill and diplomacy between nation states matter.
The United States is Looking Better Every Day!
Although President Donald Trump has firm convictions and definite plans for America, he’s a person who believes in polite diplomacy (whenever that is possible) and free trade when it works for the United States.
And on that note, America enjoys a trade surplus with the UK and has done so for as long as anyone can remember — which means the UK won’t be getting hit with U.S. tariffs anytime soon as the trade balance is in America’s favour.
In a ‘No Deal’ Brexit, the EU may need to find other customers for the millions of cars they export to the UK every decade. Germany alone exports 770,000 vehicles to Britain annually.
If the UK, the United States, and Canada sign a zero tariff trade deal on March 30, 2019 Britons will have access to more products than they’ve ever seen in their lives. And the price of goods in the United States and Canada are downright reasonable when compared to EU goods which often seem overly expensive for no discernible reason.
India, Australia and New Zealand have already indicated they’ll sign trade agreements with the UK shortly thereafter.
Lift up your eyes Theresa May, better days are ahead!
Bonus Videos:
Theresa May: EU criticism of Chequers plan is a ‘negotiating tactic’
Theresa May demands respect from EU and says their behavior is ‘unacceptable’
Related Articles:
- Motor vehicle trade between the UK and its main EU partners — ACEA
- Everything you might want to know about the UK’s trade with the EU — FullFact.org
- Deloitte study finds that the German car industry would be severely hit by a ‘no deal’ Brexit — OpenEurope.org
Related Articles Since Salzburg:
- Jeremy Hunt: Don’t mistake politeness for weakness — BBC
- Theresa May’s withering riposte to the EU was the speech of her life — Telegraph
- Theresa May Brexit deal: Why has the EU rejected the Chequers plan? — Express
- Arlene Foster applauds Theresa May for STANDING FIRM against disgraceful EU — Express
- Theresa May speaks to the BBC in New York on September 25, 2018 — BBC
Letter to Britain 