London property slowdown not due to Brexit

Brexit has failed to harm the prime central London market and Stamp Duty is actually the biggest factor on deals, data suggests.

Figures from Knight Frank show the number of viewings in June was 17% higher than the same month in 2015, and up 40.8% over the past six months.

Buyers have typically requested a discount of up to 10% or more off the asking price, but Tom Bill, head of London residential research for Knight Frank, says this is in line with the trend since recent Stamp Duty changes on more expensive properties.

He said: “In June 2014, annual growth in prime central London was 8.1%, the last peak before a period that saw growth fall steadily to -1.5% in July 2016.

“This slowdown was a natural consequence of strong price rises between 2009 and 2013; however, the process was accelerated by two Stamp Duty increases and a series of other tax measures.

“Indeed, despite the widespread media coverage devoted to the EU referendum and its potential impact on house prices, the primary factor curbing demand in prime central London remains Stamp Duty.

“The result of this two-year slowdown is that vendors had already begun to adapt to the new pricing environment and in many cases Brexit has been a trigger to make overdue reductions to asking prices.”

On the lettings side, while rental values fell 3.6%, actual tenancies in the three months to June rose 3% year-on-year and viewings increased 15.8%.

This chimes well with data from London agent Portico, where branches reported a 1.7% drop in rental values. But prime central London areas continue to impress.

Its July rental market update, based on its own branch activity, shows that rental prices for two bedroom properties in Kensington and Chelsea have in fact increased by 0.4% post Brexit, between May and July to £3,989, while rental prices in Westminster have also gone up by 1.7% to £3,989.

Camden was the best performer between March and July, up 3.3% to £2,559. The biggest falls in the capital were recorded in Merton, falling 7% to £1,621.

The two prime central London boroughs reported the highest average rental prices per month out of all the London boroughs, with the average rental price for a two-bedroom property in Kensington & Chelsea nearly topping the £4,000 mark at £3,989.

Robert Nichols, managing director of Portico, said: “Caution in the sales market has pushed demand into the prime rental market, and as such we have seen rental prices rise over the past few months.

“We expect the market to remain stable throughout the summer months, but whether rental prices will continue to rise will depend on the economic consequences of Brexit.

“Outside prime central London, the rental market has remained stable, with tenants still keen to snap up properties in hotspot areas created by infrastructure projects like Crossrail.”

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Written by: Houseladder