How has Brexit affected the price I could get for my property in Hampstead?
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There is still demand for property in Hampstead, especially from international buyers, but vendors must be prepared to accept price reductions says Aree Rand of Knight Frank in Hampstead.
I want to sell my home in Hampstead but I’m concerned that north London is no longer seen as a safe investment for international and domestic buyers following the UK’s vote to leave the European Union. Should I still market my property and if so, will I still be able to get a good price for it?
Following the result of the EU referendum on June 24 we’re facing uncertain political and economic times in the UK. However, our research at Knight Frank suggests that this is a short term issue and that the market will right itself in the medium to long term.
Hampstead is a great area and London is one of the best cities in the world, while the United Kingdom is a G7 nation with one of the world’s largest economies, which will continue to go from strength to strength. We’re facing uncertain times here but we’re not the only country facing uncertainty. The US has elections coming in November so their entire political and economic landscape could change and we’re going to see elections in both Germany and France next year.
There are underlying strengths in our economy which are going to reinforce people’s views to believe that London is a good place to be investing, particularly from an international perspective.
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There’s a lot of demand out there for Hampstead properties from professionals who want to be near the City, from families who like the great schools, and from downsizers who might be moving from the suburbs to a smaller place a bit more central.
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Reflecting that, we’ve seen very healthy activity following the referendum. The Friday after the vote we had 12 viewings booked in across the office and every single one of those applicants attended those viewings. We have not seen a single transaction fall out of bed. Not one prospective buyer who was due to exchange on a certain date post-referendum has cancelled or withdrawn their offer. We’ve even transacted on sales from £900,000 to £3million for people who work in leading banks, who are obviously witnessing the fall in the pound but are buying regardless. This is because they are buying these homes as a residence for at least five years, so they don’t expect the medium term investment to be affected.
For international buyers there’s never been a better time to buy in London and we’ve seen a significant upturn in the number of international buyers that we’re seeing, particularly Chinese and American because of the strength of the dollar against the weakened pound – dollars are going a long way in the current market. Americans can get an incredible price on properties.
Also money’s cheap at the moment and it looks like it’s going to get even cheaper, which is a benefit for domestic buyers too. Mortgage rates are so favourable that we’re advising people with, say, a 60 or 80 per cent cash deposit to put down 20 or 30 per cent and invest the rest of the money elsewhere.
So as you can see, there are plenty of reasons to buy but the reality is that very few people actually need to buy a property, whereas there will always be people who need to sell, whether that’s for tax reasons, probate, divorce or downsizing.
In order to secure a sale and give a buyer confidence to buy, it’s very important to get your pricing right and we’re finding that vendors are far more amenable to accepting price reductions. If you’re planning to sell your property now our advice is that you should be willing to adjust your prices to the tune of 10 to 15 per cent.
This has not happened purely because of Brexit. The threat of mansion tax, the general election, the stamp duty increase for properties over £1million and the additional stamp duty on second homes have all created a great deal of uncertainty in the market for the past 18 months or so. But Brexit has pushed the message home and people are now accepting offers 10 to 15 per cent lower than the guide price.
This is what we’re advising vendors in Hampstead: absolutely put your property on the market now – international buyers in particular will be looking for a bargain – but you must be prepared to accept reasonable offers on your property.
Aree Rand is a partner and office head of Knight Frank, Hampstead. If you have any property related questions for Aree email them to firstname.lastname@example.org or tweet @HamHighProperty.