The word on everyone’s lips this year has of course been ‘Brexit’, but we’ve noticed that higher rates of stamp duty and tax have, so far, had more of an affect on property market activity than any repercussions as a result of the EU referendum on June 23rd.
Those repercussions, however, have led to a surge in interest in prime central London property as overseas investors look to take advantage of the fall in value of the pound sterling and low interest rates. These two realities have made the market even more enticing to overseas investors who still, despite the economic uncertainty caused by Brexit, regard London as a safe haven market and a leading centre for business and investment, both in commercial and residential property.
Even though prime property prices have fallen overall in 2016, driven by stamp duty increases (including the extra 3% levy on second homes) and previously over-inflated prices, we are now seeing demand increasing, and viewings across Belgravia and Mayfair in particular, are on the up.
What’s happened in Belgravia?
Since mid-2014, price growth has slowed in Belgravia, partly as a result of two stamp duty increases. Subsequently, Belgravia now offers better value for money when compared with other central areas such as Marylebone, where prices have increased.
Demand has increased both from buyers in the UK and overseas. The overseas investors market is buoyant as we see out 2016, with investors from abroad coming to Belgravia to buy because of a weaker sterling and favourably low interest rates. Overseas buyers are effectively getting a discount of over 10% through the currency, when compared with before the referendum. According to figures released by LonRes, approximately half of Belgravia buyers come from overseas.
There remains a lack of available stock in prime central London areas, and that includes across South Kensington, Chelsea and Knightsbridge as well as Mayfair and Belgravia. This is again due to low interest rates and high stamp duty costs on properties which sell for in excess of £1million.
According to the LonRes Residential Review for Autumn 2016, the market over £5million has seen the highest reduction in prices, and this is partly due to high stamp duty costs.
What’s happened in Mayfair?
In contrast with other areas in the Westminster and Kensington and Chelsea boroughs, Mayfair has not seen negative annual growth in the years following the global financial crisis. Elsewhere in prime central London, a slight slowdown has taken place, but Mayfair’s property market has remained resilient.
Following the EU referendum, some buyers decided to be cautious and not follow through on their property purchases. This is especially true of more speculative buyers. On the flip side, we have seen a spike in interest from international buyers looking to capitalise on the drop in the value of the UK currency.
We have also seen a small drop in asking prices in Mayfair, but nevertheless, the market is solid. Mayfair property is a very desirable asset, especially when measured against other forms of investment, such as the stock market. With all that Mayfair has to offer, buyers and investors can be confident in choosing Mayfair.