Subdued prime London property market likely to stay low due to UK election result

The property market in London has been more subdued than elsewhere in the UK and this is likely to continue with the unexpected general election result producing a hung Parliament.

While political and economic uncertainty will affect the housing market in general, there had been recent signs of both the buying and letting markets in London picking up.

However, according to Jo Eccles, managing director of buying and relocation agency Sourcing Property, the election result is going to create further uncertainty which is likely to keep London housing activity at its current lower levels, certainly for the short term.

‘We especially expect it to deter overseas buyers from making a long term commitment to London property, which will particularly impact the prime property market,’ she said.

In terms of domestic buyers, she believes the uncertainty may mean they delay non-necessary purchases such as buy to let investments. ‘UK buyers will still carry on with their lives. We saw this in the run up to the election as none expressed concerns about the looming election campaign and it didn’t put off their decisions to buy property in order to upsize, move areas and so on,’ she pointed out.

She also revealed that companies are still moving very senior executives to London but less so with junior employees. She expects the rental market to continue to be favoured compared to buying for anyone relocating to the UK for a three to five year period, particularly at the high end of the rental market where stamp duty is putting people off making shorter term purchases,’ she explained.

‘At the lower end of the rental market, we are likely to see mid-level professionals continue to want break clauses in their tenancy agreements to give them flexibility in these uncertain times,’ she added.

With talk of a softer Brexit, Naomi Heaton, chief executive officer of London Central Portfolio, believes that this may attract more overseas buyers as global events such as the Trump-Russia affair and continuing destabilisation in the Middle East are causing even greater economic and political flux outside the UK.

She also pointed out that the diminished threat of Labour implementing aggressive uncosted tax and spend policies will also be welcome to investor sentiment, taking the edge off uncertainty caused by the election result.

‘Significant tax increases targeted at property investors that Labour might also have instituted are now less likely to occur and currency changes may encourage more active investors to take advantage of discounted prices in the property and stock market,’ she said.

Nevertheless, she anticipates that sales will continue to fall in the prime central London whilst investors assimilate the new situation, particularly at the luxury end and in the new build sector, already battered through the introduction of new residential taxes.

‘For the domestic housing market, outside prime central London, the recent evidence of a downturn by most data analysts, due to concerns over a weakening UK economic position and rising inflation, is unlikely to be reversed in light of the current events,’ she added.