Prime country property market showing signs of pent-up demand
Prime country property prices in the UK were virtually unchanged in the second quarter of 2019, up by 0.1%, an on an annual basis they were 2.3% lower, the latest index shows.
However, the index report from real estate firm Knight Frank also shows that underlying demand is building with the average number of new applicants and viewings per Knight Frank office at its highest level in five years.
There has been a significant slowdown in supply in the £1 million plus sector with a year on year fall of 18% in properties listed for sale in England and Wales. Knight Frank says that this underlines a potentially advantageous position for active and new vendors whose properties are competitively priced should the current political uncertainty recede as market performance is tied to the political and economic outlook.
The report explains that sentiment is the key driver of activity in prime regional markets sot the current uncertainty means that discretionary buyers and sellers are cautious. Consequently, pricing has been subdued and stock levels are muted.
It also explains that whether the signs of pent-up demand translates into a pick-up in activity will remain largely dependent on the outlook, but an analysis of listings data from Rightmove shows that stock levels are low.
The number of properties newly listed for sale so far in 2019 in England and Wales above £1 million has fallen 18% compared with the same period last year and by 30% compared with the same period of 2016 which was before the referendum which led to Brexit.
‘Sentiment is the key driver of activity in prime regional markets and this is reflected in slightly more muted performance in recent months. But there are signs pent-up demand is forming,’ said Oliver Knight, Knight Frank residential research associate.
‘Knight Frank figures show the average number of new applicants and viewings per office rose to the highest level in five years in the second quarter. Whether this translates into a pick-up in activity will remain largely dependent on the political and economic outlook, but it suggests that underlying demand is building should political clarity be forthcoming in the coming months,’ he added.
According to Rupert Sweeting, Partner, head of national country sales at Knight Frank, correct pricing has never been more important. If the price is spot on viewings occur and offers follow, but overpriced property is sitting in the market stagnating,’ he said.
‘Whilst the political uncertainty of Brexit is affecting the confidence of some buyers, others, especially international investors, are taking advantage of the current market and relative discounts due to the weakness of the pound. We have every confidence that activity will turn around when Brexit is eventually sorted, with political stability engendering greater confidence,’ he added.