Prime Property Market Outlook, post-Brexit
Political and cultural shifts have been the talk of 2016 around the world; however, the British nation continues to keep the property market at the forefront of their mind with one eye closely following the changes presenting themselves since the EU referendum. Immediately after the referendum, the prime real estate market experienced a slow in house price growth, dropping from the average annual growth rate of 9.7 percent to 8.3 percent in July. Luckily, supply and demand have fuelled the continual growth of UK house prices, with highs of 12.3 percent in London. The annual growth rate lifted slightly in August and asking prices also started to increase, with a 0.6 percent rise from July.
The uncertainty of the market left brokers and estate agents with concerned buyers and record numbers of transactions broken. With their absence, overseas investors were able to swoop in and replace those losses. An additional boost for these investors was the fall in the value of Sterling, with US buyers looking at 10 percent discounts. Negotiations also saw an all-time high in May with discounts of up to £25,000 on the asking price, which is a substantial jump compared to the average discount of £4,000, as reported in January.
Current Market Outlook
With the average market value of a UK house at £214,140, 2016 Q3 experienced drops continuously for the three months of the quarter, which hasn’t happened in over four years. Albeit, the average home valuation was a 5.7 percent increase compared to the third quarter of last year, yet it was a drop from the second quarter of 6.8 percent. Market values are not the only area affected by the Brexit, with a 15 percent fall in new home registrations in the UK and a 62 percent decrease in London alone.
Currently, the average property entering the market is priced at £309,122, up 0.9 percent from last month. Buyers are on the rise as the market begins to stabilise. London has experienced a 2.4 percent growth is asking prices with the average property now entering the market at £645,833.
Established London real estate agents, Wetherell, have revealed a residential market in Mayfair with a value of £750 million. With 161 properties available for purchase in August, buyers have a much higher choice than they did in 2015 and 2014 with 161 properties being a 25 percent and 67 percent increase respectively. Buyers are also faced with 37 percent fewer houses than last year, but 40 percent more flats are available on the market. With a reduction is asking prices on 45 percent of the apartments and 36 percent of the houses, since they were first listed, buyers are in an excellent position in Mayfair. Of the properties sold up to now, this year has achieved an average 89 of initial asking prices, only a three percent drop from last year at 92 percent.
The High-Value Market Outlook
Supply is stable on the Mayfair market, yet demand seems to be down with transaction volumes taking a hit. However, this has affected the lower end of the market harder, with the least significant fall seen in the £10 million and over market compared with the rest of prime central London, where there has been 32 percent fewer transactions. The high end of the market has only seen transaction volume fall by 19 percent this year. Although this decline puts sales volumes 35 percent lower than compared with 2014, it is substantially less on property priced under £10 million at 44 percent.
Due to the vast supply and choice on the market for buyers looking to spend over £10 million, with a 25 percent jump since August this year, this end of the market will continue to stand strong and sales volumes to reflect this.
The RICS predicts the next five years will see annual house price increases of 3.3 percent, which can only be positive