Despite the ongoing political climate, there are some green shoots of growth after the drought of long summer – have London buyers and sellers run out of patience waiting for Brexit to happen?
A promising report from HMRC indicates that the property market appears to be picking up as the count of U.K. residential property transactions for October 2019 was 4.3% higher compared to October last year. This is a promising sign after 19 consecutive months of price falls, according to The Times, but also an indication that buyers aren’t waiting around for Brexit to happen.
Andrew Montlake, managing director of Coreco, explains how the current conditions have made an ideal climate for buyers, “Extremely low borrowing costs, a strong jobs market and more affordable prices are underpinning activity in the market despite the political bedlam. We’re seeing a lot more people lock in to extremely competitive five-year fixed rate mortgages, which offer a medium-term hedge against the uncertainty of how Brexit will play out.”
These favourable conditions have led to an increase in sales in throughout the U.K, totalling 103,680 in October, as buyers become more focused before the end of the year. Invisible Homes has also noted this trend as we have agreed 4 sales in the last 10 days – more than we would expect for this time of year as the property market usually starts to wind down before Christmas.
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LONRES also reports that the number of 3rd quarter transactions in exclusive postcodes such as Mayfair, Belgravia and Knightsbridge increased by 14% compared to the same period last year. This could be a prediction as the ‘ripple effect’ dictates that prime London areas act as a forecast for the rest of the London property market.
One contributing factor could be the number of foreign buyers returning to the prime markets. The Financial Times reports that reduced prices in prime locations, combined with a weak sterling value, means that purchasing a London home with US dollars is 42% cheaper today than it was five years ago.
Estate agents argue that there is a huge amount of pent-up demand from UK buyers, and a lack of stock could be one reason for this; LONRES reports that there were 14% fewer homes on the market compared to the same time last year. This is promising news since this is still before the fog of Brexit has lifted.
Agents appear to agree, Mark Wells, CEO of Invisible Homes comments, “the market is already feeling strong in South West London since many buyers are so convinced there will be an uplift after the election that they are trying to push on now.
On the other hand, many sellers are waiting to sell until the new year, so there is less to choose from. It looks like next year should start very well, with both buyers and sellers wanting to finally move forward. How that equilibrium of demand vs supply will pan out over the year is less clear, but the election should spell a welcome unblocking for the market.”
Although it is hard to predict what is in store for 2020, there seems to be light at the end of the tunnel for the property market.