The sales volume for London super prime residential transactions have continued despite some of the anxiety of the economic uncertainty with Brexit. A recent report from Knight Frank showed that for the year to June 2018 the £10 million and more residential property sector recorded 121 transactions compared to 133 for the previous year in a review by PropertyWire.
The total value of transactions for second quarter of 2018 the super prime market topped £707 million which was a 22% increase compared to 2017 and an increase of 23% compared to the second quarter of 2016.
For the third quarter of this year the number of prospective buyers increased by 7% in the £10 million and more sector and was 17% higher when compared with the same third quarter period for 2017.
When compared to the peak period of September 2015 the super prime residential market has declined by 9% as a result of imposed higher stamp duty rates.
Tom van Straubenzee, head of private office at Knight Frank says:
‘There have been recent signs that price reductions have begun to have an impact and a degree of traction has returned to the market. However, the current political uncertainty is still curbing demand overall, not only in relation to Brexit but also the associated risk of government instability.’
This has resulted in a more ‘needs based’ buyer in the £10 million and up market and locations including Chelsea and Notting Hill have performed stronger when compared to other London markets due as a result of increased numbers of British buyers with family reasons.
Tom van Straubenzee explains:
‘There are some buyers and sellers who are active because they will remain in the UK largely irrespective of the political backdrop.’
Many buyers are still taking a wait and see approach as the pending details of the economic and political situation becomes clearer. Viewings of properties remain high as buyers look for value.
Rory Penn of Knight Frank:
‘Sentiment is therefore playing a major role in the market but once there is a feeling that a sensible Brexitdeal has been reached and speculation over the future of the Government dies down, I believe there is acertain amount of pent-up demand that will be released.’
Super Prime Lettings Market
For the the super-prime rental market for £5,000 or more per week increased by 5% over a 12 month period ending in August 2018.
Tom Smith, head of super-prime lettings at Knight Frank:
‘First, political uncertainty has made some people slightly apprehensive about the next six months.’
‘Demand above £8,000 per week tends to be more discretionary, and we have seen the number of deals dip this year.’
Between the period of January to August 2018 there were 17 tenancies made at £8,000 per week which was decrease of from 26 tenancy agreements in 2017 and 27 in 2016.
Stabilisation of the £10 million plus market is seen as another factor as higher rates for the stamp duty are now built in to the pricing and buyer interest with some landlords of the these super-prime properties now considering on selling their properties.
‘The owners of around a third of super-prime properties currently on the rental market would consider a sale at the right price. This is a higher proportion than we have seen for several years.’
‘Tenants are also starting to pay more attention to the sales market so I sense we are at the start of a period where more of them could become buyers, which is why tailored advice is absolutely critical.’