London’s long-term position as a global property investment destination remains unchallenged and the appeal of Prime Central London (PCL) continues to be strong, despite the ongoing political and socioeconomic uncertainty caused by Brexit.
Demand Building Up
- Currently, we are witnessing demand building up as most buyers and sellers have been waiting over the last few years due to the socio-political uncertainty caused by Brexit.
- Low stock levels continue to be an issue, as new instruction volumes remain low. Interested buyers face a lack of choice with limited new stock reaching the market.
- According to LonRes, since 2014, 73% of properties withdrawn from the market have yet to be relisted for sale. Property prices under £1 million were least likely to come back to the market, with just 24% being relisted compared to 35% of properties priced at £2 million or more.
- With lower levels of stock, we are starting to see a deceleration in price drops.
Pricing to Sell
- Sellers who have brought their homes back to the market (following a prior withdrawal) tend to be more realistic now with pricing.
- Of those properties withdrawn since 2015 and relisted since the start of 2018, 62% returned to the market at a lower price, while just 18% saw a price increase (some of these may have had improvements to décor or a lease extension).
- We have also witnessed an increased level of enquiries for off-plan properties as clients are favouring post-handover payment plans as a way to climb the property ladder while developers are providing substantial discounts for bulk purchases of more than three to four units.
Opportunities to Upsize
- With larger, more expensive properties recording significant price falls, the gap between smaller apartments and larger houses is narrowing, presenting the opportunity for end-users to upsize/ upscale.
High Yield Levels
- With sales prices dropping and rental values on the rise, average gross yields at 3.6% in Prime London are at a seven-year high.
- The market is witnessing an increase in renewals taking place instead of new lets, due to very limited new rental stock.
- The current scenario makes investing in Prime Central London an even better opportunity for dollar-pegged economies despite the ongoing uncertainty of Brexit and its future impact.
