Sales volumes in London’s super prime residential property market have proved relatively resilient this year despite the impact of political uncertainty surrounding Brexit negotiations, according to a new analysis.
There were 121 transactions in the year to June 2018, compared to 133 in the previous 12-month period, in this sector of property worth £10 million and more, the data from the Knight Frank super prime market insight report shows.
Despite the decrease, the total value of sales in the second quarter was higher than in the previous two years and the total value of £10 million-plus transactions was £707 million, 22% more than the same period in 2017 and 23% above the total in the second quarter of 2016,.
The report points out that last year was marked by uncertainty ahead of the June general election and the European Union referendum had a similar impact in 2016 and the relatively stronger performance in 2018 underlines how the market can respond with a relatively more stable political backdrop.
The total number of prospective buyers in the £10 million plus price bracket was 7% higher in the third quarter of 2018 compared to the same period in 2017 and the total number of new prospective buyers that registered in the same three month period was 17% higher than in the third quarter of 2017 while the total number of viewings was 29% higher
However, prices above £10 million have declined 9% since their last peak in September 2015, a decrease that the report says more than compensates for the impact of higher rates of stamp duty. The difference between the current rate of stamp duty and the rate before December 2014 is the equivalent of 4.1% on a sale of £10,000,000, or 7.1% when the 3% surcharge for second homes and investors is added.
‘There have been recent signs that price reductions have begun to have an impact and a degree of traction has returned to the market. However, the current political uncertainty is still curbing demand overall, not only in relation to Brexit but also the associated risk of government instability,’ said Tom van Straubenzee, head of private office at Knight Frank
He explained, that as a result, the £10 million plus market is, for now, largely driven by needs based buyers. Activity in markets like Notting Hill and Chelsea is therefore relatively stronger than other parts of prime central London because those areas have a higher component of British based buyers who are moving for family reasons.
‘There are some buyers and sellers who are active because they will remain in the UK largely irrespective of the political backdrop,’ he added.
According to his colleague Rory Penn, many buyers who are taking a wait and see approach are actually poised to act quite quickly once the political situation becomes more settled and viewing levels remain high and a number of buyers have been scrutinising the market over a long period of time so are keenly aware when properties represent good value.
‘Sentiment is therefore playing a major role in the market but once there is a feeling that a sensible Brexit deal has been reached and speculation over the future of the Government dies down, I believe there is a certain amount of pent-up demand that will be released,’ he added.
