While uncertainty surrounding the outcome of the EU referendum has disappeared, the London residential market remains price sensitive.
Demand since the start of the year has been relatively subdued, as the market absorbs two stamp duty changes in the last 18 months and awaited the EU referendum result.
Overlapping layers of uncertainty have been a feature of the market since the summer of 2014, and annual price growth in prime central London declined to -0.6% from 8.1% in the two years to June 2016.
Demand has begun to return as sellers have reduced asking prices by more than 10% to reflect higher transaction costs producing market conditions that underline the importance of detailed market knowledge.
It is too early to see if demand returns following the EU Referendum result. We are however now talking to a number of our clients who are seeing opportunities. Prices are already being reduced by 10% to counter higher transaction costs, so I think we are likely to see further reductions by motivated sellers.
Although the ratio of active buyers per available property in prime London fell to 5.9 from 11.9 in the year to April 2016, underlying demand is strengthening. The number of viewings increased 43% between January and May versus 2015 and competition remains strong for the best properties.
Buying off-market has increased. I am regularly approached by buyers who value our ability to tap into our network of contacts and source off-market properties.
A quarter of our London transactions between January 2010 and May 2016 were off-market. Furthermore, the average discount between achieved and asking price was 5.1% in the year to May 2016.
One trend that has remained unchanged is the propensity for buyers to cast the net wider.Searches are no longer predicated on being in one specific part of London as buyers want more bang for their buck.
Areas including Queen’s Park and Barnes are now attracting buyers priced out of central London and it is a trend that will continue, including into east London. As long as the schools, transport links and restaurants are good enough, there is no stigma anymore.
Head of London, The Buying Solution
t. +44 207 591 2640