The prime property market in London has started to experience a rebound of its own, according to findings by Coutts, a private bank specialising in wealth management.
London is home to some of the world’s most lavish prime real estate, and with a fall in uncertainty following last year’s conclusive general election results, prices for luxury properties in the capital rebounded, growing 4.8 per cent in the final three months of 2019.
A combination of soaring demand and supply constraints helped push prices in London’s prime property market to their highest levels seen since the end of 2017.
News of the prime sector’s recovery comes as the broader housing market in London becomes increasingly affordable, as price changes continue to be outpaced by rising wage growth.
Prime remains a buyer’s market
The findings from Coutts reflect a broader recovery in the UK housing market, and are significant, as London’s prime property market receives a large amount of investment not only from domestic buyers but from across the world as well.
Supply of high-end homes was estimated to have dropped as much as 11.8 per cent by the end of 2019, and sales were booming, having grown 10.1 per cent during the same period. Much of this increased activity was concentrated in the final months of the year.
Coutts insisted that the prime sector was very much a buyer’s market, with the expectation that competition to secure a piece of prime real estate would increase, as the market entered the new year.
Katherine O’Shea, a spokesperson from Coutts Real Estate Investment service explained: “Historically, the number of properties put up for sale has usually improved in the first quarter of the year, so we would expect more homes to come onto the market in the coming months.”
Ms O’Shea added: “But the number of buyers is also likely to rise, as the political uncertainty of the last few years continues to unwind. This increased demand could push prices higher.”
Higher costs for overseas buyers expected
Despite the apparent signs of green shoots in the prime property sector, the much-anticipated Spring Budget could do much to complicate matters, especially for buyers from overseas who may wish to invest in the capital.
Stamp Duty Land Tax (SDLT) is expected to be overhauled, with the possible introduction of a three per cent surcharge for overseas buyers. The Budget, to be delivered by Chancellor of the Exchequer Sajid Javid, was originally supposed to be held in November 2019, but the general election led to it being delayed considerably.
Alex Lyneel, home buying strategy manager at Coutts, claimed: “No formal announcement is expected before Budget Day, but as we’ve seen in the past, the changes could be introduced overnight. This means they might apply to all transactions which exchange contracts after midnight on 11th March.”
Mr Lyneel concluded, saying: “Prospective buyers could therefore look to push through their purchases now, to avoid paying extra. That’s what we’ve seen happen with previous Stamp Duty hikes over the last few years.”