New certainty in the post-Brexit London boosts activity in the city’s prime markets. A three per cent tax on foreign buyers of homes in the UK that was included in Boris Johnson’s Conservative party’s manifesto ahead of the election saw a rush of sales in London’s luxury property market during the fourth quarter of 2019. A surge of deals on London’s most expensive properties shot up by 78 per cent compared to the same period a year before with heightened activity in home sales across London’s priciest markets. As 2020 is subsiding most of the uncertainty after the reach of the Brexit exit agreement, favourable factors are coming together for a buoyant spring market, releasing the pent-up demand for luxury properties.
CLARITY DRIVING DEMAND
After a period of prolonged political uncertainty that culminated in the Brexit exit agreement and the election, the uncertainty shrouding London’s residential real estate market has been lifted, with a return to growth in the city’s prime neighbourhoods. The rise of properties listed by new sellers has been steadily increasing since December 2019, while the average asking prices has increased by 2.1 per cent, according to Rightmove House Price Report. The win of the Conservative Party is also good news to luxury home buyers – a win of the Labour party would have meant unfavourable to the luxury property market reforms to taxation and changes to laws for landlords.
With the Brexit saga out of the way, sellers are gaining confidence in a market no longer affected by Brexit deadlines. The optimism is spreading among wealthy overseas buyers with demand steadily rising even after the late 2019 buying frenzy in the hours after the general election result. Buyers are treading cautiously but with increased confidence, emboldened by better political and economic certainty.
“There is a widespread perception that the London prime market has turned a corner and residential property now represents better value,” says Ed Lewis, Head of London Residential Development Sales at Savills. “This seems to be borne out by increased activity in these markets since the new year and a return of buyer confidence.”
While the unprecedented levels of interest are also driving the asking prices up, prime London’s sales prices were still 5.5 per cent lower than the year before. Luxury residential market, therefore, is still filled with bargains – amidst the cautious optimism, vendors are still hesitant to hike prices too much as not to stall the freshly buoyant residential market.
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