UK Property - London Residential Sales Review Q3 2019
PRIME LONDON SALES MARKET INSIGHT
The political twists and turns of Brexit are causing activity to ebb and flow in the prime London property market, as Tom Bill explains
Political uncertainty continues to have a tangible impact on activity in the prime London sales market.
While the overall number of exchanges was marginally higher in the first six months of 2019 compared to the same period last year, it was not a uniform trend over the period.
Transactions declined year-on-year in January and February, underlining the mood of uncertainty as the original Brexit deadline of 31 March approached without a political consensus on the way forward. The first failed meaningful vote on Brexit took place on 15 January.
Between March and May, the number of exchanges increased compared to last year, reflecting how a greater degree of confidence returned as the March deadline was delayed and the prospect of a disorderly “cliff edge” Brexit receded. Indeed the rise in May was 10.4%.
However, transaction levels fell marginally again in June, demonstrating how political uncertainty returned following the resignation of Theresa May at the end of May and as the Tory leadership election got underway.
The new prime minister has pledged to boost the UK economy, which should drive activity in property markets, all else being equal. Anticipating any short-term impact on pricing from a stamp duty cut, as proposed by Boris Johnson, is less straightforward given the potentially distortive effect on supply and demand. However, such a move would reduce trading frictions and should therefore raise transactions and tax revenues in the long term.
Meanwhile, pent-up demand continues to build. The total available budget of prospective Knight Frank buyers in London rose to £51.5 billion in Q2 2019, as stamp duty-related price adjustments drove demand.
Despite strong demand supply remains constrained The supply of new properties remains more subdued as vendors hesitate due to the political uncertainty. New listings in PCL and POL were 21.7% lower in the year to Q2 2019 than the previous 12 months.
Higher-value markets continue to outperform for reasons that include the fact price growth was more modest than the wider market between 2009 and 2015. The number of exchanges above £10m increased by 33% in the year to June 2019, compared to an equivalent 3% decline between £1m and £2m.
Source: Knight Frank Research
FOR FURTHER INFORMATION PLEASE CONTACT:
TOM BILL - Head of London Residential Research
+44 20 7861 1492
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