Election shock leads to more uncertain times for London property market
- Credit: Archant
There may be deals to be had in the super prime market as uncertainty hits the exchange rate, but stamp duty and lack of stock means the sub £3 million market will remain sluggish
A vote for change has lead to confusion. Theresa May failed to capitalise on her majority, and has instead plunged the British political system into more uncertainty mere weeks before Brexit negotiations are due to begin.
Currently there is no cause for undue concern for those already on the north London property ladder. The market in micro climates such as Hampstead will remain relatively stable, thanks to a supply of top end schools that consistently attract families looking to buy in their catchment areas.
Otherwise it looks set to be another quiet summer from mid July until September, as people continue to only move home if absolutely necessary.
For the prime market, the damage to price inflation has already been done by stamp duty and buy-to-let restrictions.
However, those hoping to negotiate a large discount in the post-election confusion should tread carefully.
A shortage of stock in the popular £1 million to £3 million bracket means a low ball offer won’t get you far.
“If you try and renegotiate in that price range when there are few properties available you will shoot yourself in the foot,” advised Glentree director Trevor Abrahamson.
The real deals are to be had in the £5 million to £10 million bracket, where there is currently an oversupply of stock.
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“Here you can get away with a more adventurous attitude,” he said. “The canny buyer will use it as a great excuse to extract better terms from the purchase, but it will depend on the price range you’re in.”
Whilst the market infamously hates uncertainty, Abrahamson is confident that the devaluation of the pound will paradoxically boost the market, due to an influx of overseas investors taking advantage of the exchange rate.
“Already clients are benefitting from a 15 to 20 per cent currency depreciation, and proper values are down are down 20 to 25 per cent since the highs of 2014, so they’re getting a combined discount of circa 20 per cent.”
The pound dropped sharply after the exit poll, but stabilised following May’s announcement that she would form a minority government with help from the DUP.
The younger vote came out in force to turn London red. Whilst they have proved undeniably that they are socially engaged and care deeply about social issues such as education and healthcare, the problem of affordable housing will have also played a part.
No party gave a strong answer on how to solve the housing crisis, but Labour’s rallying cry of ‘for the many, not the few’ resonated with those who can see gleaming towers of unaffordable homes being built literally and figuratively out of reach.
Former housing minister Gavin Barwell lost his seat in Croydon Central, after a gaff over a social homes pledge that transpired to relate to a less affordable type of housing.
However, his deposition may have given landlords and letting agents a temporary reprieve on the fees consultation, which Barwell had been overseeing. The consultation on whether letting agent fees paid by tenants should be banned closed on June 2 and the results are currently pending.