Crown Mayfair Market Review – Pre Election SpecialMay 1, 2015 3:21 pm
With spring well and truly sprung and the UK general elections around the corner, political rhetoric and market tensions are at their peak. As past experiences go, elections tend to breed an air of uncertainty and risk, yet they equally offer opportunities for investors to make their move while the ambiguity clouds the market and dampens intentions. In spite of the political upheaval, the London property market maintains its buoyancy, the consistent levels of demand underlining the election furore above.
Q1 2015 reports show a 26.7% decline in transactions in compared to this time last year, however rental values increased by 7.4% compared in the same period. It appears that the substantial levels of price inflation in the past three years, seem to have peaked, plateaued and are now in many, but not all sectors, in decline. With property now at the forefront of many political agendas, much of the super prime and high value property has ended up in the limelight and consequently in the taxman’s sights.
At the top end of the spectrum, property transactions in the £5-10 million bracket are down by 35.3% compared to Q1 2014. This can be attributed to the changes in SDLT (Stamp Duty Land Tax) having the greatest impact on this end of the market, although the rush to exchange before the infamous midnight deadline last year will have skewed data slightly.
Either way, as transactions and demand dampens, prices too have begun to fall and the effects are filtering down through the price brackets. The £1-2 million region remains the most resilient to sentimental and supply changes (transactions down by 8.5% compared to Q1 2014), however situations are far more volatile the closer you get to the fringes of the brackets and the consequential tax implications. However, this has all led to an improved and improving environment for buyers and as certain areas of the capital and types of stock remain less affected by policies and pricing, opportunities verily remain.
Our own books have even seen a marked increase in the number of buy to let investors wishing to capitalise on secure long term property investments. Meanwhile the various owner occupiers we are presently engaged with have been largely unfazed by political stirrings, purchasing out of want as well as necessity and have structured and sought accordingly.
The decisions made in the coming week concerning the new government and the policies they implement will of course be vital to determining investor sentiment and personal wealth structuring, especially for non-doms should Labour/SNP snatch power. However it remains to be seen that despite the ballot box hysteria and political battering that London property has seen recently, demand for accommodation is legendarily resilient. With the array of schemes across the capital and with rental demand rising unceasingly, home owners and buy to let investors alike should continue to be able to take advantage of what the city and the suburbs have to offer.
(Figures courtesy of Lonres residential review 2015)
This post was written by Tim Jones