Whilst the summer has now finally passed - more’s the pity; it seems like quite some time has passed since we voted to leave the EU. As the 3 month anniversary approaches, it is worth reflecting on how the prime central London property market has been affected, compared to how the vote was predicted to have an effect.
Forecasts for how the housing market would respond to the shock of the Brexit vote have so far been wide of the mark – with house sales showing surprising resilience in the countrywide market. Before the referendum, experts predicted that economic uncertainty in the event of a Leave victory would cause house prices to fall, with any downward pressure on prices exacerbated by an exodus of overseas buyers. The Treasury estimated that in the event of a defeat for Remain, house prices would be between 10 and 18 per cent lower over the next two years. Whilst it is early days and our extraction is yet to be triggered, the latest official figures, published last week, reveal that house prices based on completed transactions rose 8.3 per cent year on year in July, the first full month after the referendum. This was down from the 9.7 per cent annual rise recorded in June, but is still a rapid acceleration and a world away from the predictions of a sharp swing into negative territory.
The prime central London (PCL) market has always operated slightly differently to the rest of London and indeed the country; it is very much a micro market driven by overseas investment in the main. Whilst pre-Brexit the prediction was an exodus of overseas buyers, the weakness of Sterling vs those Dollar pegged currencies has meant that some buyers, especially those from the Far East, are seeing approximately 10% being wiped off asking prices. The question is can this be off set against what has been a steady decline in activity since late 2014 when George Osborne introduced the changes to SDLT and other taxes on those buying from overseas, creating a continuing decline in market activity?
Nearly 3 weeks into September and we at Marler & Marler are seeing an increase in activity in PCL, following the traditional summer lull. Buyer enquiries are up, offers are being tabled and motivated sellers and buyers are getting their desired results. Whilst we do not predict an enormous upsurge in activity and certainly no price growth over the coming year, the Armageddon that was predicted has not played out in the PCL market. It remains to be seen how it is affected once the real negotiations of our exit begin but in the short term, it seems, there is still some confidence in prime central London bricks and mortar.