Record numbers of transactions crumbled immediately following the EU referendum, due to buyers pulling out of sales. However, overseas investors brightened estate agents and mortgage brokers days around the nation as they took advantage of the 31-year low fall in the value of the pound and swooped in to replace those losses. The decrease in the value of Sterling is boosting the prime property market, with US buyers benefiting from discounts of up to 10 percent and everyone able to negotiate higher discounts in asking prices of up to £25,000, which is a significant increase on the £4,000 reported average in January. A large majority of the investments made in US dollars over the last six months were Americans who had already been renting in the UK taking advantage of the conversion rate and investing while they can.
With lending rates also extremely attractive and household debt continuously reducing since 2008, buyers are finding themselves at a significantly lower risk when investing in new property or up-sizing. Interest rates are currently below 2 percent and are expected to stay there for at least the next 12 months and with deals at 3 percent fixed for 10 years, the market is extremely attractive for investors.
Investing in Prime Central London
For investors looking at prime central London, Mayfair property values are strong and the choice of listings available is significantly increased compared to recent years. There is currently £750 million worth of residential property available on the market in Mayfair with 161 properties listed in August. According to a new report from Wetherell, this is 24 percent higher than the number of listings in August 2015 and 67 percent than the same time in 2014. Although there are 37 percent fewer houses listed than last year, there are 40 percent more flats available for sale.
Investors can buy confidently knowing that there has only been a 3 percent decrease in achieved asking prices since last year, dropping from 92 percent to 89 percent. However, 45 percent of flats and 36 percent of houses listed on the prime central London market have had their asking prices reduced since they were first listed.
With the increased levels of stock and substantially lower transaction volumes, buyers will be spoilt for choice. Although transaction volumes in prime central London have decreased by 32 percent, they have only dropped by 19 percent in the £10 million and over market thanks to the number of properties available in this price range increasing by 25 percent since August 2016, from 100 to 125. The difference in transaction volumes has been consistent with the start of the year seeing 44 percent fewer transactions in prime central London on properties priced under £10 million and only 35 percent fewer in the £10 million and over market.
The prime property market, post-Brexit
The nation remains focused on the Prime Property Market as the key player in the UK’s economy. Following the EU Referendum, house price growth slowed and decreased continuously until recently, with the annual growth rate falling to 8.3 percent in August from 9.7 percent in July.
However, with the UK needing 200,000 new properties to be provided each year to meet the demand, the shortage of supply continues to increase property prices and has started to pay off. September and October experienced house price increases at a rate of 1.4 percent, according to the Halifax index.
The last six months has seen a 15 percent drop in the number of new homes registered in the UK, with 62 percent fewer registrations in London. The average property price entering the market has been rising over the last two months at a rate of 0.9 percent, and 2.4 percent in London reaching average property price tags of £309,122 and £645,833 respectively.
The next five years is expected to experience a 3.3 percent increase each year in average house prices, according to the Royal Institution of Chartered Surveyors. Transactions may be down in the UK property market, but stock is up and the market is stabilising towards a positive improvement.