Welcome to the first update!
Hello and welcome to the very first update!
It’s an interesting time to be launching a property business in London to say the least, so let’s get down to business and see what’s going in the market. There is an abundance of information about the property industry and more predictions than one can count, so the point of these updates is to break the information down and make it digestible.
There are several factors that have negatively affected the market. Brexit, the threat of Jeremy Corbyn as Prime Minister, increased stamp duties and less favourable taxation on landlords renting out properties. There’s no doubt that Brexit is one of the main players behind the drop-in prices not only in London, but the whole UK. Many potential buyers are waiting to see how Brexit plays out before proceeding with purchasing a property, significantly slowing down the market. To make matters worse, the threat of a Jeremy Corbyn government has made potential buyers even more wary, especially at the top end. According to The Telegraph, many of the country’s wealthiest families are making preparations to leave the UK should Corbyn come to power. Some argue that the most drastic effect is the increase in stamp duties. In December 2014, there were significant rises for property worth more than £925,000 and £1.5m. As of 2016, anyone who purchases a second residence in the UK has to pay a 3% stamp duty surcharge(in addition to the standard stamp duty rates). As a result, luxury homes have been the most affected. Prime real estatehas fallen by over 19% since 2014. This is evident along the Thames where there is an abundance of new developments that are struggling to sell. The Spire, which was set to be the county’s tallest residential building was put to a pauselast year. It began at the height of the market in 2014, however the developer said the unstable market conditions has put a stop to the development.
The flipside of this uncertainty is that there are deals to be made. According to Zoopla, “homes in London are selling for an average of 5.7% less than originally asked, rising to 7.6% in inner London, which has seen the highest level of price falls. And buyers in Kensington & Chelsea are able to negotiate double-digit discounts”. Buyers are becoming more cautions and are taking advantage of the weaker market conditions. Sellers are having to accept bigger discounts in order for their properties to sell, a result of an uncertain market. Positively, there are some reports of the market strengthening and reporting a positive outlook. According to an article in the Property Industry Eye, homeowners believe that there will be a 5% rise of prices in over half a year, while a home moving comparison website predicted that there will be an increase of 9% in house prices between now and August. These predictions are clearly over optimistic, but nonetheless a refreshing sign that the market is still strong despite all the political turmoil. According to mortgage lender Halifax, house prices in the country grew at the fastest yearly rate since 2017 during the three months to the end of May. In fact, prices in the three months to May were up 5.2% compared to January 2018.
I recently attended a talk by the financial times with some industry expert speakers – the theme of the talk was “Is now the right time to buy property in London?”, which was subsequently put into an article. The conclusion was split. The more conscious view is to wait until all these political and economic risks have calmed down. On the other hand, if you are waiting for the perfect time to buy, you might be waiting for a very long time and there are good deals to be made in this uncertain market.