The London prime property market is witnessing a revival as lower mortgage rates infuse optimism among buyers.
With a notable increase in property exchanges, confidence is gradually reinstating within the sector, aligning with overall economic improvements.
The London prime property sector is witnessing a resurgence in optimism. An increasing number of transactions have been observed, attributed largely to falling mortgage rates. According to Knight Frank, property exchanges in London during June and July rose 8.4% above the five-year average. This trend signifies a release of pent-up demand after a period of high inflation, reflecting a broader UK market recovery.
Despite positive movements, concerns persist regarding financial pressures. VAT changes on private schools and stricter non-dom rules are expected to affect the prime market, setting it apart from the general market’s trajectory.
Potential adjustments in pension tax relief, inheritance tax, or capital gains tax may further strain buyers’ finances, sparking debates on the long-term sustainability of current market conditions.
Average prices in prime central London have faced notable drops.
Over the year to July, prices fell by 2.4%, the third consecutive month maintaining this annual decline. Currently, prices sit 4.5% below pre-Covid levels and 17.6% below their peak in August 2015.
These statistics highlight the ongoing challenges within the market.
Rental prices in prime central London have experienced variations, rising by 2.5% in the year leading to July, marking the first dip below 3% annual growth in three years.
As Labour revisits the Renters Reform Bill, uncertainty is infusing the lettings market, potentially complicating leasing conditions.
If landlords opt to sell instead of rent, an upward pressure on rents could result from diminished property availability.
Recent political maneuvers have implications on market trends. Labour’s slightly amended position on non-dom rules represents a shift towards nuanced policy-making rather than broad changes.
While some adjustments are aimed at market stabilisation, others could inadvertently heighten market volatility.
London’s prime property market stands at a pivotal point of cautious optimism.
While financial challenges persist, the potential for growth remains if strategic policy measures align with market needs.
