London's Waterfront

London's Waterfront
 
The Market In Context

26 January 2016, by Sophie Chick

The outlook for London’s Waterfront needs to be considered in the context of the wider prime London market.

 

The sales market

A decisive election in May 2015 was expected to boost confidence in the prime London market, but it still remains relatively price sensitive, particularly at the top end. This reflects the increased transaction costs resulting from successive reforms to stamp duty, and in the more domestic markets, the ongoing impact of increased mortgage regulation. We expect this to lead to muted price growth in the short term as the market adjusts to a new fiscal and regulatory backdrop.

Along the Thames, regeneration and development will likely continue to be the catalysts for change in the profile of housing along the London waterfront. However, a large pipeline can bring with it some uncertainty, and it takes time for new markets to mature. Currently, supply continues to be met by good demand for new build properties, demonstrated by consistent off-plan sales.

The future of London’s waterfront

Over the next five years the London economy is forecast to continue strengthening, which will underpin demand for prime rental property over the medium term as more people move to London for employment opportunities. This will benefit the rental market along the Thames, as well as many tenants choosing to live on the river for lifestyle reasons.

A potential risk to the sector is the high level of stock coming to the market from both new build properties bought by investors and accidental landlords who are delaying a sale of their property until the market adjusts fully to the new rates of stamp duty. This will be particularly evident in locations where a new residential district is being created, as the full rental value of an area is not realised until the development delivers a sense of place.

However, over the medium term, we believe that as the supply of rental properties increases, it will be met with demand resulting in an active prime London rental market.

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