Crown Mayfair Market Review – 2016 Outlook

With the new year there always comes a renewed sense of purpose and positivity, which seems rather essential given the battering global stock markets have taken and in light of the increased taxation of the UK property market.

And so it is always positive to take note of the capital’s resilience in providing opportunities and continued long term price growth despite the occurrences elsewhere in the world and closer to home in Westminster.

Savills latest news update reported that London property alone now accounts for over a quarter of the UK’s total property value. (£1.612trn of a total £6.17trn)

5 Year Prime Central Price Growth Forecasts – 2016-2020

• Savills – 21.5%
• Knight Frank – circa 20.3%
• CBRE – circa 25%

With last year’s mortgage regulation and various increases in SDLT cooling the market, price growth has continued but at more realistic levels. However many will support that this benefit is still restricted to the more affluent buyers entering the market.

At lower ends of the spectrum, tighter lending controls and regressive taxation have impacted on the ability for buyers further down to trade up or even get on the ladder.

In turn, this has facilitated the pricing ripples out of Prime central London and continue to increase the attraction of surrounding, ‘better value’ boroughs.

This too has further reinforced the strong levels of demand in the private rented sector. The number of privately rented homes in the UK has risen 28.3% since 2010, thus encouraging both investors and the government’s imposition of new tax in this market.

Property Investment Outlook

• According to Knight Frank’s 2015/2016 Tenant Survey, 71% of Londoners have stated that being close to transport links is their primary concern when choosing a new rental property. Access to amenities such as gyms, pools and green spaces are also top factors determining tenants willing to pay a premium.

• Gross yields are expected to reach 4.75% in London by 2020, with private rented sector investment increasing from £15bn to £50bn over the next 5 years.

• Capital growth is expected to be highest in ‘secondary’ areas such as Acton, Ealing & Greenwich, benefitting from pricing ripples and improved transport links. Main hindrances to price growth remain interest rate rises and mortgage regulation.

• With key infrastructural projects such as Crossrail coming into fruition in 2019 and with many of London’s key regeneration schemes completing over the duration, the capital’s long term investment landscape looks strong and its property as an asset class maintains its safety and standing.

House Comments

In spite of the various increases to our client’s associated costs, Crown Mayfair has received strong levels of client interest in the latter 6 months of 2015 and over the New year. Including Owner occupiers and Investors, our books have received very positive levels of activity as clients seek to prioritise purchases; in aims of either beating tax deadlines, investing their funds into the safe haven of UK property or having reached a time where they are able to focus their full attention on the bricks and mortar of the capital.

Data Credits: Knight Frank, Savills, CBRE

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This post was written by Tim Jones