According to the latest analysis from real estate firm Winkworth the recovery in the UK financial services industry is bolstering the sentiment of domestic buyers and adding to demand for prime properties.
It says that while property has continued to prove highly attractive in recent months to international buyers with strong demand coming from Asia in particular, where a growing middle class is fuelling interest in overseas buying, this interest could be tempered in 2014.
The analysis suggests that a recovery in sterling as the UK economy shows further modest improvement, a reduction in both global and Eurozone risk lessening the pull of the London market as a safe haven, and an increasing number of properties incurring stamp duty at the maximum rate of 7% as prices push through the £2 million barrier could have an effect.
‘The net outcome of the above factors is that we would expect to see a further 5% rise in central London prices next year. We anticipate a higher level of price appreciation in suburban London of some 10%, as an estimated £130 billion of Help to Buy mortgages and an ongoing low interest rate environment stimulate buying against a background of limited supply. Cheaper mortgages for the professional classes, greater job security and improved employment prospects will underpin the family house market,’ the report points out.
A year ago the firm noted a developing trend suggesting that the traditional route of families moving out of London had changed in recent years, with an increasing number of families choosing to move within London rather than leave the capital. According to Winkworth agents at that time, of all families buying in London over the course of 2012, 71% moved either within the local area or to other parts of London.
But a recovery in prices is now underway in the South East of England as government schemes which supported professional buying in the mid to lower end of the housing market are now feeding through to greater activity at the upper end.
‘We believe that, in 2014, many that have held off buying in the country and kept their money in London will look to take advantage of the value gap that has opened up and make a lifestyle choice to move out,’ the report points out.
‘This will be supported by improved job security and a return to a more flexible style of working than in recent years. Consequently, we expect to see greater demand and price growth of around 5% in the South East,’ it explains.
‘So transactions should continue to rise towards their long term trend level of one million per annum. We expect to see an increase of some 15% in activity levels in 2014,’ it adds.
‘As mortgage costs fall for both the home owner and the buy to let investor, we envisage that prices will continue to move up in London in 2014 and, for the first time since 2007, start to improve in the country markets,’ the report concludes.
