The London property market has begun to improve in the past few months, despite uncertainty.
“Seller price discounts have begun to attract buyers,” maintains LonRes, a property data firm that claims it covers about 95 per cent of agent transactions in prime London and about 50 per cent of agents in Canary Wharf and further out in central London.
“Analysis of prime central London LonRes data shows the number of properties going under offer is rising,” says Marcus Dixon, the head of research at LonRes.
In the second half of 2018, the number of prime London property deals rose by 6 per cent compared with the same period in 2017. This followed an 8 per cent fall in the first half of 2018.
“In every month since June, the number of properties going under offer has risen compared with the same period in 2017,” Mr Dixon said.
“The market over £2 million (S$3.5 million) has been particularly active in the last three months, with a 12 per cent increase in properties going under offer in the second half of 2018 compared with the same period a year ago.”
Slight revival in property market follows lengthy quiet period
Roarie Scarisbrick, a partner of Property Vision, which is also independent of agents and advises buyers, agrees that there has been an increase in activity.
But he cautioned that in the 18 months prior to July 2018, the market was “sticky and turgid”.
Activity was then well down due to uncertainty over a variety of factors, especially high stamp duties on new property.
Mr Scarisbrick also maintains that the “buy to let” investment market is much quieter, mostly due to higher costs, notably stamp duty and other tax. Gross rental yields average around 3 per cent and net, 2 per cent. Most of the transactions have been from local buyers who have been either upsizing for more space or downsizing.
Foreign buyers benefiting from cheap pound, seek bargains
Anecdotally, Asian and other foreign buyers have taken advantage of discounts ranging from 10 per cent to 20 per cent. The much cheaper pound, which has devalued by 15 per cent against the Singapore dollar and by 14 per cent against the US dollar since the 2016 Brexit vote, has also been an incentive.
Apartments under £1 million ($1.28 m) have been more popular and the lower stamp duties on the cheaper priced real
“With continued lack of clarity on Brexit, some buyers are still holding off from transacting,” Mr Dixon said. “However, sellers are becoming more realistic on pricing and some buyers, recognising this, are taking advantage of Brexit jitters to secure their next home at a good price.”
Sellers forced to cut asking prices
Evidence of this can be seen from data showing how sellers have been cutting asking prices. In the fourth quarter of 2018,
“Sellers are realising
Both Mr Dixon and Mr Scarisbrick believe that activity and prices would lift temporarily if the Brexit parliamentary mess is resolved. But this would be the result of pent up demand. Medium and longer term, the market is more likely to settle down. But growth would be relatively low as prices are high for first-time local buyers and stamp duty and other taxes are a disincentive.
This article was first published in The Business Times, Singapore