Regional property market in UK outperforming central London, says new analysis
Regional property prices continue to show steady growth while the market in London remains static, according to a new analysis.
Overall property price growth is likely to reach 2.5% for 2018 while the prime central London market is expected to see no growth in the best case scenario and a fall of 5% in the worst case.
The Autumn residential quarterly report from property consultancy Strutt & Parker also gives an outlook for 2019 and the firm is forecasting growth of 2% while the regional UK forecast remains the same at 2.5% for 2019.
‘As the year has gone on and the economic uncertainty has continued, we expect to see stagnant prices or further negative growth in the final stage of 2018,’ said Vanessa Hale, director of research at Strutt & Parker.
‘There is the possibility of price decreases continuing into 2019 as both globally and domestically the economic and political environments remain volatile,’ she added.
Guy Robinson, head of residential agency at Strutt & Parker, pointed out that sales across the country have been encouraging in comparison to last year and the number of registered buyers is gradually increasing, as are the viewing numbers, outstripping 2017.
‘Buyers are no longer using the uncertain political climate as a reason to sit on their hands and those who need to make a move are serious about selling which is keeping the market in motion,’ he said.
In prime central London sales have fallen by 1.8% compared to the third quarter of 2017 but Robinson explained that this overall decrease masks the fact that the sub £2 million and the over £5 million brackets experienced 0.8% and 11.8% quarter on quarter increases in transaction volumes.
He added that the prime central London property continues to attract overseas purchasers albeit at slightly lower level than historically and August was a particularly good month for sales.
Keenly priced properties are generating the most interest as sophisticated buyers who understand the long term strength of the London market are still out there. Nevertheless, the growing number of hoops to jump through for compliance and the overall conveyancing processes are causing properties to take longer to exchange, the report warns.
In the new build sector of the prime central London market the most activity is at opposite ends of the spectrum. ‘As a general rule, we are seeing a growing importance on completed stock from buyers who want to see the quality and environment of a property first hand before making an offer,’ said Mark Dorman, head of London residential development and investment at Strutt & Parker.
‘On the flipside, some experienced buyers are taking advantage of the opportunity to buy off-plan in the very early stages of a scheme, two years or more ahead of development completion,’ he explained.
‘It’s a market of two extremes when it comes to price too. At the lower end, anything up to £1,300 per square feet is appealing to the market, whilst properties at the very high end priced £15 million and above are also selling. The vast majority of properties in the middle, priced from anywhere from £2 million to £10 million, are proving less popular and volumes remain low,’ he added.
In the lettings market, the take-up of new rental tenancies across the prime central London market decreased by 12.7% in the third quarter of 2018 compared to the same period last year and is down 22.1% on the five year average for the third quarter.
‘We are seeing people renting out properties because they haven’t been able to sell them, or moving into rental accommodation temporarily because they have found a buyer for their house and don’t want to lose them,’ said Kate Eales, head of residential lettings at Strutt & Parker.
‘The prime central London market is 18 months to two years ahead of the rest of the UK’s rental market and properties that went to the lettings market have now gone back on the sales market which is moving again, with adjusted prices,’ she pointed out.
‘Over the next few months, I think we will start to see rental prices go up slightly in central London for the first time in 24 months as stock levels tighten, alongside the impact of the tenant fee ban which will be introduced in April 2019,’ she concluded.