Britain: Prime Country & London Property Outlook
In its January price index for prime country property Knight Frank reports that for the final three months of 2019 the prices for country homes were unchanged and that prices along with values have been declining or flat for the past three years. Until recently and for so many regions of the nations property markets the Brexit situation had played the largest role in market uncertainty with deals on hold and others reluctant to put properties on the market.
However Knight Frank reports that interest by prospective buyers rose 9% in the 11 months to November 2019 compared to the previous year. The firm also is forecasting that the prime regional markets should increase by 1% in 2020 and as much as 11% for the next five years.
Rupert Sweeting, Head of Country Sales, Knight Frank told World Property Journal recently:
"2019 saw a year of uncertainty caused by delayed Brexit and the general election. Looking forward, the fog will lift with the newly elected government's clear majority allowing some certainty and a return of confidence to the property market in × 2020. Buyers who have been 'sitting on the fence' can move forward and sellers will be assured that there will be an increase in the number of parties wanting to buy. Consequently, there will be an increased volume of stock allowing for more choice"
Oliver Knight, Associate, Knight Frank Residential Research :
"The certainty afforded by the outcome of the election should result in some of the pent-up demand being released into the market. The extent to which this translates into transactions in the short-term will depend on the size of the pricing expectation gap between buyers and sellers. Supply is likely to rise in the New Year as vendors anticipate stronger market conditions. While some may expect these conditions to support higher prices, any growth in supply will potentially apply downwards pressure, and therefore demand will remain price- sensitive."
In a 2019 review of country estate properties Mansion Global considered these as safe investments.
Oliver Knight, an associate of residential research at London-based Knight Frank in Mansion Global:
"Prime country prices are still on the whole lower than in 2007, Rural areas haven’t seen the growth that London and other cities have, and a number of buyers see it as a relative good value."
Overall for the residential markets inquiries by new buyers in December rose to it highest level in four years according to a survey of 450 estate agents and appraisers. Both London and the South East which had experienced decreased sales has had a turnaround when it comes to buyer interest.
Simon Aldous, a director at Savills’ head office in London tells Mansion Global it had a “stronger year-end for prime London than we were anticipating,” and that sales of homes for £5 million (US$6.5 million) or more increased last year."
Since December confidence by sellers increased with new listings especially for London and the South East which had been heavily impacted by the Brexit situation.
As for the future as a result of of the easing political uncertainty Tom Bill, head of London Residential Research at Knight Frank says:
“In prime London markets, the erosion of the currency discount as well as the possibility of stamp duty changes for non-residents will weigh on demand in the short-term.”
“After that, we expect stronger growth to return before a dip in 2024, the date of the next scheduled General Election.”
"Interest rates—averages were at the ultra-low 2.65% for a 10-year fixed-rate mortgage as of September, according to Statista—are expected to gradually increase in the five-year period, which could restrict some potential homebuyers from following through with purchases. By 2023, interest rates are expected to hover below 2%, still fairly low compared to long-term trends."
As a result of the national politics confidence from agents, buyers and sellers has dramatically become more optimistic. One example is the recent purchase of the Rutland Gate mansion for £200 million by Chinese property tycoon Cheung Chung-kiu. This Knightsbridge property thus became the most expensive sale in the UK. Agents see this as an indicator that the London prime property market is about to zoom after so many years of price decreases and lower sales.
Liam Bailey, global head of research at Knight Frank in the Financial Times:
“A big sale like that is emblematic of the turn in fortunes that we have seen in the market since the election."
Also in the Financial Times Marc von Grundherr, a director at Benham and Reeves who is a property seller for overseas investors:
“After the election, we had people who I hadn’t spoken to in a couple of years ringing up, saying: ‘Marc, let’s really look now — what can I buy?’” In the past four weeks, von Grundherr estimates that 200 of his clients called in to their offices worldwide, interested in buying London property."
With the anticipation of increased residential prices and sales transactions for 2020 the euphoria was expressed by Trevor Abrahmsohn of agents Glentree Estates:
“I went from despair to elation in a matter of hours when the results were announced."
“This could be a golden year.”