24th September 2016
In recent articles I have been writing about the window of opportunity which has opened up in the London property market.
This has received further verification from a recent Knight Frank property report which confirms the issues which are being perceived as a consequence of Brexit. Although, let us be clear that we have not actually exited yet, neither is there formal ratification of us exiting. Merely that we have had a referendum and the people have voted to exit. Therefore, the consequences of Brexit exists actually in people’s minds and nowhere else, as nothing has happened -YET.
What has happened on the demand side of the equation is very interesting, rather than the numbers of buyers decreasing they have increased. Properties under offer have increased, in the eight weeks since the vote, by a massive 19%. This has been fueled by an increase in viewings on properties, by 49.1%, and web viewings by 20.8%.
The shift in demand has been prompted in part by those sitting on foreign currency, as they get a further discount of about 10%. This will serve to compensate the recent round of stamp duty hikes.
Overall, the reduction in prices in the prime London market has been 1.8% over the last year. This represents an average, which ranges from a decline in Chelsea of 8.9%, to the City Fringe which has a gain of 4.9%.
What’s worthy of note, is overall the drop of 1.8% is significant, in that this is the highest fall since October 2009.
Those who purchased property in 2009 purchased at the perfect time, they benefited the most from the jump in growth in the following years.
The London property index went up from 116 to 165. This is an uplift of 42%. If we assume a deposit was required of one third of the purchase price, say on a London property at £100,000, then it would now be worth £226,763.
Property has proven itself as a strong asset class; London property has become a recognised safe deposit box and there is a growing sense of confidence amongst buyers nationally and internationally in entering the market, at a time during which it is seemingly in a flux.
Buyers have reacted very quickly to this opportunity, the increase in viewings, of nearly 50% since Brexit, is a sign in the market that buyers have now grown in confidence in exploiting the situation. I doubt this confidence has been there in previous downturns. The question is will you be one of them?
Suresh Vagjiani
