Spotlight: Prime London

Residential Markets

Prime London Residential Markets
Prime London Residential Markets

21 September 2016, by Lucian Cook

Following the Brexit vote, London’s prime residential markets will need to adapt and adjust to a number of challenges

In the three months since the EU referendum I have split my time between looking for clues as to what the public’s decision means for the housing market and trying to convince my wife that I will still be able to get (much needed) spare parts for my ageing but attractive Alfa Romeo.

 

It is rapidly becoming clear that the scale of the problem with my sporty Italian hatchback is likely to mean, wherever I source parts, it will be impossible for the supplier to keep up with demand. In a strange way this has helped me put the challenges facing the prime London housing markets into perspective.

The combination of high levels of stamp duty, a substantially less benign underlying tax environment for overseas owners and general uncertainty following the Brexit vote, indicates that further price adjustments are needed to make the market more fluid in London.

Two further years of uncertainty, as the Government’s crack negotiating unit tries to extricate the UK from the EU, are also likely to limit the prospect of any serious price growth over that period.

This would bring prime London prices well below the long run trend of real house price growth. That is the kind of phrase which warms the heart of a residential property analyst. What it means for everyone else is that all things being equal it will leave capacity for renewed price growth at the end of that period.

The critical part of that phrase is “all things being equal”. What does it mean in practical terms? Well, it probably means that London remains an attractive place to invest in prime housing, with a tax environment that is not prohibitive to those looking to acquire residential real estate.

It also requires that London maintains its position as both a major world city and Europe’s financial centre.

The decision to leave the EU and the fiscal backdrop may chip away at this status. This may prevent a substantial bounce in values in 2019. But the fundamentals are unlikely to be undermined suggesting that even though the prime London markets will adapt and adjust, there will still be some life left in them in two or so years time.

If only the same could be said of my Alfa.

Articles from Spotlight: Prime London Residential Markets – Autumn 2016

Brexit and what it means for prime London

Taxation and post-referendum caution are set to shape the capital’s prime residential market

Pre-referendum performance

21 September 2016

Pre-referendum performance

September 2014 marked a turning point in the market, especially for larger property

Challenges & opportunities

21 September 2016

Challenges & opportunities

With the prime London housing market facing a number of challenges, buyers and sellers will be keener than ever to ensure they act wisely

London in a global context

21 September 2016

London in a global context

London’s prime residential markets are closely linked to its performance on the global stage

On the supply side

21 September 2016

On the supply side

Supply numbers in the prime new build market, specifically in the £1,000psf+ range, are high

What next for the prime London markets?

The underlying tax environment coupled with the uncertainty over Brexitmeans the capital’s prime residential markets are set for a period of adjustment

 
 

Receive the latest research

Key contacts

Lucian Cook

Lucian Cook

Director
Residential Research

Savills Margaret Street

+44 (0) 20 7016 3837

 

Yolande Barnes

Yolande Barnes

Director
World Research

Savills Margaret Street

+44 (0) 20 7409 8899

 

Katy Warrick

Katy Warrick

Director
Residential Research

Savills Margaret Street

+44 (0) 207 016 3884

 

Kirsty Bennison

Kirsty Bennison

Associate
Residential Research

Savills Margaret Street

+44 (0) 207 016 3836

 

Emily Donovan

Emily Donovan

Associate
Residential Research

Savills Margaret Street

+44 (0) 20 7409 5903