Monday, 18 October 2010

Commercial property not a good place to be

The Cuts are set to hit property investors at all levels, both north and south. Those who have ventured into the buy-to-let market to make a killing from excessively inflated Housing Benefit rent levels are going to catch a cold as the coalition brings down the rental ceiling and the benefits cap will tend to force families from big houses in London and the south-east. At the same time, the abolition of quangos and public sector downsizing is going to free up large chunks of commercial office space across the country. 


Whilst the HB changes will hit hardest in the south, the vacant office space is set to depress commercial markets in the north; government offices in London take only 5% of  office floorspace, but this rises to 40% in Manchester. Or to look at it another way, Labour's creation of a Stalinist central command State in the north and north east has also distorted all the markets that matter - labour and property - and their adjustment back to equilibrium levels is going to hurt. 


As this will all impact on construction output, which earlier this year was the key driver of GDP recovery, Cameron may need to consider upping investment in infrastructure schemes if the recovery is not to falter.

1 comment:

Robert said...

Cameron is already upping construction schemes. We have the London Birmingham high speed rail link top of the agenda.

Politicians love railways. They travel first class on lots of them all at our expense. They want more of the same, but faster. The general population are not so convinced of the benefits of more expensive trains. After all it is the taxes on their petrol that pays for all this public transport that they don't use.

If we are to have more construction, it should be in the roads we are paying for but not getting. They want high speed railways while the majority of us want roads that are free of hindrances to our everyday journeys.