If you talk to selling agents in prime central London, they’ll say that there is a lot more activity in the market but I’d hesitate and take stock before getting too excited. Yes, transaction numbers have increased but they are still nothing like the levels that we witnessed when the market was really flying. I’d argue it’s more a case that if the greyhound that was running at full pelt has been stationary for some time, it’s now up and walking around—but that’s it.
What few agents will raise is the unknown question of Brexit. Many say that it hasn’t had an impact but I’d argue that’s not the case. The surprise result on June 24 last year has forced many buyers to re-think their plans. Since that time, I’ve had one or two clients who’ve asked to put their search on hold as they want clarity on the outcome and there’s no telling how long it’s going to take before we have a clear idea on our future relationship. But it’s also impacted on the number of potential buyers who might have been coming from Europe—and the rest of the world—to live in London. Europeans, and let’s not forget that London is France’s “6th biggest city” in terms of population, don’t know if they are going to be allowed to stay and that’s a concern.
Another factor compressing the market is the shortage of property. Prices have come off since their peak in 2014 and that creates a degree of reluctance to sell. According to figures from Knight Frank, the average price of a house in prime central London has fallen 6.6% in the past year–although it varies from the worst hit area which was Bayswater, where prices fell 14.7%, to South Kensington and Knightsbridge where average prices fell 7.4%. Their analysis blames the huge rise in Stamp Duty (SDLT) introduced by the former Chancellor George Osborne and that’s certainly the case when I talk to clients. Only recently I was with one who was discussing plans to sell up and move but when they calculated the costs with SDLT, they’ve thought better of it. There’s no question that it’s really limiting people’s ability and desire to move.
The result is a catch 22 situation. The flow of property is reduced because prices being achieved aren’t encouraging vendors to put their properties on the market and when potential buyers can’t see where their next home might be, they become reluctant to sell. Factor in the increased costs of buying and it’s more important than ever to seek professional advice in order to make sure one doesn’t make what could be a very expensive mistake!