As the year gets closer to the end the latest forecasts, this from Savills, for London prime property has been released. The current prediction is for luxury homes to fall 4% in value this year and will not experience a rebound or stability for two more years due to Brexit and tax changes.
Its expected that prices will begin to see an upward momentum by the end of 2019 with a 2% increase rising to 8% by 2020. The delay is blamed political uncertainty and the troubles with the Brexit agreement which is going to be more difficult than expected.
Savills head of UK residential research Lucian Cook says:
“Uncertainty fuelled by Brexit and a weakened government mandate since the June election means sentiment is fragile.”
In the first nine months of this year prices for luxury residences in London have fallen 3.2% and down 15.2% over a three year peak period. The number of properties available by sellers in the £1 million and above price range to cut prices has doubled in 2017.
The forecast is for 20% growth for the luxury residential market in London within the next five years which half of the 52% long-term growth for the period 1979 and 2014.
Lucian Cook points out:
“That growth is more subdued than what we’ve seen previously coming out of historic downturns,” said Cook. “London has pretty much matured. It might lose a few jobs in financial services.”
He also cites the exposure of the luxury home sector to capital gains taxes, inheritance taxes for international buyers and increases in the stamp duty.
One prediction in the report is the loss of jobs for the city is predicted at 20,000 out of 350,000 but that London’s role as a global financial centre and tech startup hub will be intact.
Properties with values of £1 million and above for the whole of the UK in 2016 was estimated to be 394,000 which is a 3.4% decrease from the same period in 2015.
The majority of these homes, two-thirds, are in the London metro area and another 21% are located in the south-east. The Savill’s report finds that half of all homes privately owned with valuations of £1 million and more are in the borough of Kensington and Chelsea.
An exodus from the city to escape the high prices of homes has seen residents most of whom are in their 30’s moving from London increasing by 27%.
Where are they going?
The report shows that the most popular locations are Elmbridge, St Albans, Spelthorne, Epsom and Ewell, Oxford and Cambridge, Brighton and Hove, and Bristol and Bath.
Mr. Cook states:
“Here, the price gap is key, particularly for Londoners looking for more space,” said Cook. “For example, while £1m will buy just over 1,200 sq ft of home in Wandsworth, it will get you around 2,000 sq ft in Sevenoaks and more than 2,400 sq ft in Bath.”
The effect of the migration out of the London market is expected to strengthen housing growth by 15% over the next five years for commuters in the 30 to 60 minute transit belts. Making the area the largest price growth outside of London for the UK.