Almost daily we are asked how the property sales market in London is holding up in the face of Brexit. So this is probably a good time to explain the situation as we see it at the moment.
First, it’s important to point out that, when it comes to property sales, there are two very distinct elements to the market and each of these is quite different.
Those who are selling due to necessity
The first sector is made up of people who are selling (or buying) a property out of necessity due to a change in personal circumstances. This could be because they are changing job and moving to a new area, getting married or starting a family and therefore moving to somewhere bigger or getting divorced or retiring and downsizing.
This market is as busy as ever. People do not and cannot put their lives on hold dependent on what is happening politically or even economically. And many of these homebuyers are in a strong position – particularly if they wish to move to somewhere larger. Interest rates and the cost of borrowing remain extremely low. And with sales prices lower than a year or two ago, they recognise that, while they may have to sell their current property for a slightly lower figure, they will ultimately gain because they will also be paying less for the larger property they wish to buy. So there is a gradual realisation that there is no point waiting – in fact, they may gain more by buying their chosen property at a lower price.
Second homes, buy-to-let and investment properties
The second type of property buyer is one who is buying a second home or a buy-to-let property. For these buyers, timing is often not such an issue and investors are prepared to wait for the right opportunity – and the right price.
Although this market is not as busy as it was – many buyers have been adopting a ‘wait and see’ approach and there has undoubtedly been a detrimental effect caused by the tax changes imposed on buy-to-let investors, we are again starting to see increased activity and more investors making enquiries. Investors recognise that sales prices may not drop much lower and that developers are still offering good discounts on new-build properties.
And despite Brexit ‘noise’, European and international investors do continue to look to London for second homes. Recent industry research just published reveals that 57% of properties bought in prime central London in H2 2018 were by international buyers while buyers from the EU bought 19% of homes in prime central London, up 10% on H2 2017.
The continuing weakness of sterling clearly makes buying a UK property much cheaper for international investors. But recent tax changes mean buy-to-let investment is less likely to be the reason they are buying.
We are actually seeing more overseas buyers planning to use their properties as a UK base for themselves or as a home for children studying in the UK.
And while London property prices may not be surging ahead as they were perhaps five to 10 years ago, the sales market is certainly more stable now than for some time, both at the lower end (around the £500k mark) and at the super prime end with properties valued in excess of £10m.
Benham & Reeves house price research
A key factor in the upward trajectory of house prices is the continuing lack of supply, forcing up prices. You may have seen our article in the press recently, outlining our research which estimates how much a child born now will have to pay for a home of their own in London in a generation – around 34 years’ time – in 2052. If current house price growth continues at a
similar rate, this will be a staggering £4.5 million. And it is this figure, which although admittedly an estimate, that illustrates precisely how today’s fluctuations in price are only a temporary blip in the long-term performance of London property as an asset class.
Regeneration hotspots to look out for
Of course, new developments are popping up all over London and one area which has been overlooked until recently is Shepherd’s Bush. Now part of an extensive regeneration scheme, based largely around the redevelopment of the former BBC Television Studios as well as White City Living, an enormous new scheme from
the Berkeley Group, it’s in a great location not far from better known areas such as Hammersmith, Fulham and Chiswick. Westfield London,
the largest shopping centre in Europe is just a few minutes’ walk away too.
We expect this area to really take off in the next couple of years, both for homeowners wanting a flat within easy reach of central London and buy-to-let investors who will be able to take advantage of the strong rental demand from tenants wishing to live close to central London but without the high asking rentals.
around £670,000. We expect one bed apartments at Television Centre to rent for upwards of £520 per week and at White City Living flats should rent for upwards of £550 per week.
Are you planning to buy or sell a property in London?
For information on how we can help you if you wish to buy or sell a property in London, please contact our London Sales office.
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