The market has certainly cooled this year with the Brexit process well underway but raising more questions than answers, and the inconsistency of President Trump’s administration creating further global uncertainty.
The days of over-optimistic pricing may have come to an end (at least for now), but for too long prices have been on an unsustainable upward trajectory and a correction was inevitable. The precursors to this correction began some time ago, even before the referendum, with changes to the taxation of buy-to-let property and reforms to the calculation of stamp duty. In the immediate aftermath of the Brexit vote, many expected the weakened sterling to galvanise interest from overseas buyers with the temptation of better value for money in London property, but the additional uncertainty caused by a snap general election this year further undermined the market and the sentiment from overseas as well as domestic buyers is one of continued caution.
Our belief has always been to cast a true reflection of market sentiment and activity to ensure our clients receive realistic advice, even if at times it may be harder to swallow. However, many of our clients have been successful in effecting sales within a sensible timeframe at realistic prices in a tricky market.
Taking a snapshot of the market over the last decade, prices rose steadily between 2009 (after the last market correction post-financial crash) and 2011, but there was a sharp surge in pricing from 2012 right through to 2015, but finally signs of stagnation in early 2016. Some may argue that this was a natural market cycle, but perhaps prices have been hit harder in the past year than would normally be expected at the end of a cycle due to the various external factors as referred to above.
Many properties marketed at higher £psqft values during 2016 were eventually withdrawn due to lack of interest, but subsequently relisted in 2017 at adjusted prices, some of which have seen further reductions since re-listing. Prime London property data source Lonres indicates that transactions are down 12% year on year across central London, but that is as much due to lower stock levels as buyer inactivity. That said, properties in desirable blocks/streets are still selling in good time and at fair prices.
Many new developments across PCL that were priced pre-Brexit now perhaps offer opportunities to buyers seeking value as developers are keen to dispose of excess stock at discounted prices. In some cases, we’ve seen “assignments” of sales pre-completion where buyers are prepared to sell on their interest at the price they paid off-plan, giving value for money in today’s market.
Our view is that prices will continue to correct & stabilise for the remainder of 2017, similar stability in 2018 with perhaps some growth and full confidence returning to the market in 2019/20.
For this and more stories and views from the streets of London’s West End, check out the latest issue of INTHEKNOW from Tavistock Bow