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Home News Property market updates, Sales market update Weak pound will continue to stimulate activity among overseas buyers

Weak pound will continue to stimulate activity among overseas buyers

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CityA somewhat turbulent end to September (to use the Government’s own description) finds the London property market having to deal with the opposing forces of stamp duty cuts and interest rates increases.

The stamp duty tax cut announced on the UK Government’s recent ‘mini-budget’ will raise the threshold at which the levy becomes payable from £125,000 to £250,000, which works out as a £2,500 saving for buyers. First-time buyers will pay zero stamp duty on the first £425,000 (up from £300,000) and this will apply to all properties that are valued up to £625,000 as opposed to £500,000. These incentives have to be viewed through the lens of the cost of borrowing with interest base rate currently at 2.25%, a figure that may slightly dampen enthusiasm in some quarters as it leads to higher mortgage repayments.

The short-term effect on the London housing market is a modest uptick in activity with buyers not ready to go above the asking price unless they are being offered something they really want. Sellers are having to adjust accordingly and now, more than ever, are relying on professional expertise in order to set those selling prices realistically and sensibly. The government’s economic growth package is, of course, aimed very much at first time buyers and demand for one bedroom apartments and two/three bedroom houses has already begun to pick up as reported across many of our 19 estate agent branches.

No dramatic slowdown yet

No dramatic slowdown yetEnergy price hikes and cost-of-living concerns have not led to any dramatic slowdown, but they are changing the way buyers respond to asking prices. Now, a more nuanced approach is needed as price sensitivity kicks in as we enter a more sustained period of slower growth.

Demand continues to comfortably outstrip supply in the Capital and the post-pandemic bounce is affecting the market in many ways. Corporate high-flyers are returning to the City, not only to resume their pivotal positions as wealth generators, but to benefit from a government initiative that sees the cap on their bonuses lifted. This means that high-quality accommodation will be in increased demand to buy and also to let so landlord investors will be well-positioned to capitalise on this.

Investment market bouyant

Investment market bouyantTo say the rental market is buoyant would be something of an understatement and with the new Elizabeth Line bringing an extra 1.5 million people into London’s commuting orbit, buy-to-let investments continue to be big business. Overseas students are resuming their studies in record numbers as London once more provides global-class opportunities in higher education. In fact, many of these newly qualified technocrats are choosing to stay in London to live and work which makes investing in property here all the more attractive and lucrative. Our White City and Hammersmith branches have seen an 8% increase in demand for smaller properties to buy in these locations but stock is somewhat limited.

A weak pound was, this month, the subject of even more scrutiny than usual as the new government put forward a plan to stimulate growth. In property terms, it continues to provide strong impetus for overseas investment and London’s fringe areas are benefiting greatly by offering space and planning permissions to developers. The result is a string of new builds that are relatively cost effective, easily accessible and ready to form the basis of many vibrant, new communities. With liberalisation of planning rules being one of the other highlights of their mini-budget, the government are going full speed ahead with the release of land and the creation of “investment zones”. This should prevent the market from overheating and ensure that investors stay interested and while sterling is currently 20% cheaper than it was just over a year ago, this presents some unique buying opportunities for overseas buyers.

Anita-MarcSuch optimism is fine, but needs to be followed up by action. Our Directors are always ready to promote the advantages of investing in London property and have lined up a series of overseas trips in October. They will be available for private consultations as well as holding meetings and hosting various events.

More information about Directors Trip to Dubai, Kuala Lumpur & Singapore

So, all in all, there is bound to be slight downward pressure on London prices in the coming months, but the effect will be to gently slow the rate of increase, rather than stopping it altogether.


About the Author

Philip has been working within the property industry for 15 plus years with experience gained across several different divisions of property sales. In his role as Manager of New Homes and Residential Development, Philip specialises in driving business for off-plan sales and new homes to achieve the investment goals of many domestic and international clients. - Read full profile