The spring market got off to a rather busy start with a flurry of buyers pushing to complete their purchases before the end of March to avoid the rise in stamp duty, however since the beginning of April things have settled down again.
Overall, there remains a genuine demand for well priced property, although there are fewer enquiries over £2m and many asking prices being reduced prior to sales being agreed. According to London property database Lonres, the first quarter of 2016 saw 45% of properties sold in Prime Central London achieve less than 90% of their asking price, compared to 33% a year ago and 20% in the same period of 2014, the trend indicating the anticipated market ‘correction’ is well underway.
The Chancellor has introduced some fairly punitive measures aimed squarely at the buy-to-let market and the fall-out is yet to be felt, but our view is that the Central London market will be resilient and remain an attractive place to invest given its proven stability during uncertain times. The higher purchase costs and short term returns through rental yield and capital growth may not make it quite as attractive as it once was, but taking the longer term view, its still a highly desirable and convenient place to live with a limited supply of good quality homes continuing to underpin values.
We have seen a downturn in activity from foreign buyers, but at the same time a resurgence in interest from domestic buyers, particularly those looking for longer term secure investments, a central London pied-a-terre or those looking to house their children whilst they undertake their studies.
The gap between seller’s and buyer’s expectations seems to be narrowing and vendors are beginning to ask more realistic prices and consider sensible offers, that said, its still hard for buyers to drive a hard bargain.
We expect an small increase in values across the sub-£2m market of perhaps 3-4% over the coming year with limited supply and a reasonable demand, but higher value real estate may take longer to see a similar uplift.
Check out the spring edition of Tavistock Bow’s IN THE KNOW for further market insight and West End lifestyle features.