Rishi Sunak has been unveiled as the next leader of the Conservative Party and thus the UK's new prime minister, after Penny Mordaunt signalled her exit from the leadership race.
The selection of Sunak by his peers follows his correct predictions of financial fallout from the budget policies of his erstwhile rival, Liz Truss.
In hustings, three months ago, Sunak set out a fiscally conservative manifesto, warning that the approach favoured by Truss and her soon-to-be chancellor, Kwasi Kwarteng, was 'dangerous', with its stress on unfunded tax cuts.
The markets responded as feared, sending sterling plummeting and prompting the Bank of England to carry out emergency gilt market operations.
Now, the real estate sector will be wondering what a Sunak era will bring. Although the heir apparent has been largely tight-lipped in the last few weeks, his prior manifesto is likely to shine some light on his approach.
Said Giles Coghlan, chief market analyst, HYCM: 'Already, the markets have stabilised on the expectation that Sunak may be able to restore the UK’s finances. Before today’s announcement, the pound rallied higher at $1.13 on Monday morning as Boris Johnson exited the leadership contest, while the FTSE 100 started the day with a 0.5% boost, bringing it above the 7,000-point mark for the first time in a week.
'This renewed confidence means that investors are now pricing in a slightly less hawkish hike from the Bank of England, just under 5%, lower than the 6% expected in the aftermath of the government’s disastrous mini-budget. Ultimately, this could mean cheaper mortgage repayments for homeowners.'
Added Melanie Leech, chief executive, British Property Federation: 'The last few months have damaged the UK’s international reputation and economic standing, the country urgently needs strong and competent leadership to rebuild confidence.
'The new prime minister needs to confirm their leadership team as soon as possible and provide clarity on their strategy for stabilising the economy and their policy priorities. The property industry stands ready to work with Rishi Sunak in creating a thriving economy and addressing regional inequalities through the delivery of new homes, work and leisure spaces that are essential to revitalising our towns and high streets.'
Said Nick Sanderson, CEO, Audley Group: 'Key issues like housing, health and social care have been left on the ‘to-do’ list through the political turmoil of the last few months, and now desperately need attention. This doesn’t have to mean investment, especially at a time when the government needs to look at cost cutting, but it does require thinking cleverly.
'Planning reform, which mandates for age-specific housing in any new housing scheme, would have the single greatest impact on both the housing market, but also the way we look after our ageing population.'
Sunak is expected to bring in an era of further tax hikes, which is likely to calm the markets; however, the prospect of austerity could unduly affect consumers, and the new PM's approach to energy bills is as yet unknown.
Concluded Coghlan: 'However Sunak’s premiership unfolds, there are likely to be more difficult times ahead for the UK economy as it grapples its way out of a worsening downturn and even the prospect of a general election – upheaval which could derail the markets further.
'That said, there is one aspect of help for the GBP that is often overlooked. On the other side of the Atlantic, a slowdown in Federal Reserve policy would likely help lift the GBP as much, if even not more, than UK fiscal policy.'
