How the last six months have affected the Prime Property Market
Despite the sudden panic of buyers pulling out of property transactions following the EU referendum, property prices continue to rise around the UK. The demand for property has declined slightly, but still remains high and this, in line with a short supply of property on the market, has led to an increase in prices, with London leading the way at 12.3 percent. Although the referendum led to house price growth slowing down from 9.7 percent to 8.3 percent in July, prices are rising steadily and asking prices had already increased by 0.6 percent in August, compared to July.
The prime market has also been boosted with the value of Sterling falling. Estate agents and mortgage brokers have seen an increase in overseas investors, which is not surprising since US buyers are seeing discounts of up to 10 percent against the pound. There has also been an increase in asking price negotiations, with the average discount of £25,000 on a UK property in May, being pushed even higher.
The prime property market, post-Brexit
The post-Brexit property market encountered a three-month decline in property prices for the first time in four years. The third quarter drop of 0.5 percent resulted in the average home being valued at £214,140, which is approximately £1,000 lower than in June. Undeterred by this continuous decline, house prices were actually shown to be up 5.7 percent in the third quarter compared to the same period last year. However, the second quarter was down 6.8 percent compared to last year with London dropping 2.5 percent.
The number of new homes registered in the UK has decreased by 15 percent, with a significant 62 percent drop in London, since the EU referendum. However, this month the average property added to the market is priced 0.9 percent higher than last month, reaching an average of £309,122. This increase is dramatically higher in London with a 2.4 percent increase and an average price of £645,833.
Buyers remain in a good position in one of London’s most exclusive neighbourhoods, Mayfair, with £750 million worth of residential property currently on the market, according to a new report from Wetherell. Stock levels are high with 161 properties listed for sale in early August; that’s a 25 percent increase on 2015 and 67 percent increase on 2014. There were 37 percent fewer houses on the market in August 2016, compared with the same period last year, but 40 percent more flats. Properties have achieved on average only three percent lower sales prices over the last three months at 89 percent of their initial asking price, than that of the same period last year, at 92 percent.
The £10 million and over market in Prime Central London
Mayfair has experienced a substantial decrease in transaction volume, in spite of the strong property values on the market. Surprisingly, in comparison with the rest of prime central London, the £10 million and over market has fallen the least significantly. Property sales in this price range have fallen by 19 percent compared to 2015, however, property sales priced below £10 million have fallen by 32 percent. The same can be said when comparing transaction volumes with 2014 figures, with the £10 million and over market down 35 percent in comparison, yet the rest of prime central London property transaction volumes down 44 percent.
Listings available in the £10 million and over market have increased by 25 percent since August 2016, rising from 100 to 125, and this greater choice of available property explains the lower decrease in transaction volume.
The property market has always played a pivotal role in the UK consumer economy and the uncertainty following the referendum has not shadowed its popularity as a topic of interest around the country. Now the property market has started to improve, following the initial post-Brexit lull, predictions suggest house prices will continue to rise at 3.3 percent a year on average for the next five years.