Is prime London property in recovery?
“Some prime London agents are shouting ‘recovery’ from the rafters lately, and there have been some groundbreaking sales to back them up.” So says Zoe Dare Hall of The Telegraph, writing in the spring edition of Mews News.
Zoe is an award-winning writer who specialises in luxury properties. She was recently invited to produce an overview of the Prime London Market by mews property experts Lurot Brand.
According to LonRes, central London sales figures were up by 27% in the month following last December’s decisive election, compared with the same period in 2019. After a disastrous year for £2.5m-£6m properties, many experts were surprised to find that this sector showed the fastest growth. Buoyed by January figures, including a 4.4% rise in properties under offer, Rightmove has described the figures as “a window of stability.”
After three years of political uncertainty, Zoe applauds this positive upward trend. However, she is careful to remind readers that no-one can know the full effect of Brexit, or its effect on the property market until trade talks are concluded.
Time to move?
Buyers who had been waiting for the bottom of the market are now accepting that the time has come to move. Conversely, vendors who witnessed the New Year spike are seizing the opportunity to increase their asking prices. While the best quality properties are predicted to rise by around 2%-5%, lesser properties can’t be expected to achieve the same. In spite of these predictions, however, LonRes reported that in the month following the election, asking prices rose by 137% (as against January 2019).
The effect of Stamp Duty
Prime central London property has seen a 32% drop in transactions since the stamp duty reforms of 2014. A large proportion of any buyer’s property budget is now made up of taxes, and vendors are losing out because of this.
According to Zoe, there has been a “double whammy of Stamp Duty and Brexit uncertainty.” However, she explains that the Brexit-related fall in the pound has meant a bonanza for overseas buyers. In recent years these buyers have enjoyed discounts of up to 40% on their prime central London purchases.
Lettings market predictions
Following the New Year price spike, Zoe reports that Buy-to-let landlords, scared off by increased legislation, are now letting go of their investments. At the same time, ‘accidental’ landlords (vendors who turned landlord as they waited for prices to rise) are now more motivated to sell.
This means a large drop in the number of new rental listings and an increase in the number of tenants seeking homes. Zoe believes that this imbalance between demand and supply is likely to push rents up in the long term.
London’s “untouchable reputation”
In summing up, Zoe Dare Hall suggests that London will continue to be one of the most desirable places to live. She cites the capital’s “untouchable reputation” as a global financial and tech hub, a centre for learning and a city renowned for history and culture, adding: ”Few other cities can truly compete”.