Halleluiah, there has been more activity in the last eight weeks in the London Property Market, than in the past two years.
After all the negative effects of the Stamp Duty hikes, Non Dom changes etc., the middle to upper sectors of the London property markets have been in a parlous state. Values have been dropping by 25%, or more, and the time taken to sell properties in excess of £5million, has increased from say six months to 18 months. Frankly, in 40 years of trading I have not witnessed such an extended malaise, without any end in sight.
Here is the good news! Since Brexit has devalued the Pound by 15/20%, the word is out amongst the international community, that property in ‘the greatest city on earth’ is cheap!
By way of illustration, up until May of this year, we had not seen ‘hide nor hare’ of Russian buyers, probably due to the problems with their local economy and the Sanctions imposed upon the country. However, in the last eight weeks we have seen more Eastern European buyers than you can ‘shake a stick at’ and, they come with renewed vigour. In fact, about £120million of sales have taken place/agreed in the northwest London area alone, which is remarkable to say the least.
Also, we have seen Middle Eastern and Iranian buyers wanting to fill their ‘saddle bags’ with ‘booty’ by taking advantage of the reduced property values and currency gain, which together, represents a near on 50% discount, which is impossible to find in any other metropolis in the world.
You could say that these are the first fruits of Brexit, and goodness knows what would have happened to the London Property Market had we remained in Europe, after the Referendum last year, with an emboldened Prime Minister Osborne and a strong Pound. The Stamp Duty deterrent would have effectively closed down the property markets, as we know them, particularly for foreign investors.
I understand that the Chancellor is presently looking not only at the Stamp Duty Receipts for the Treasury, but the wider effects of the subdued Property Market on the Economy generally, which is no bad thing. Frankly, the changes to Stamp Duty have been a foolish escapade ever since they were implemented in the Autumn Statement of 2014, when the ‘slab sided’ SDLT calculator was reformed.
As the eloquent Jacob Rees-Mogg MP has said on numerous occasions, we need to encourage these international wealth creators to come and invest in this country, spend money here, particularly in the post Brexit era. The French, Italians and Portuguese are all trying to lure these wealthy individuals to their own countries, by offering them substantial tax breaks, which is fine and dandy, but the difference being that they do not have London as their capital city.
In Bishops Avenue alone, there have been three notable deals, agreed or sold, of multi-million pound properties. One bought by the Chinese, one by an English developer and another by a Middle Eastern investor with a total value of over £50million.
In the £1-2million range the market was also getting a little ‘sticky’ with lethargic buyers in no hurry to commit. But even this has accelerated in pace over the last few weeks which is all the more welcome, since activity usually tails off at this time before the summer recess.
As an example, we thought twice whether to launch a new development of apartments in Hampstead Garden Suburb, called Hampstead Reach, over last weekend but have been overwhelmed by the response which we have received as a result with ten sales already confirmed.
I think the ‘penny has dropped’ and there is a recognition amongst certain buyers that values have fallen as far as they are likely to go and whilst the market may ‘level peg’ for a while with the general shortage of stock, the next move must be upwards.
In the prime sector there has been an over supply, but even this is starting to contract as more deals take place and as vendors accept the new reality in terms of values.
With the Brexit negotiations trundling along, hopefully they will no longer ‘grab’ the main headlines and let us hope that for the foreseeable future we do not get another Election, since the spectre of having Mr.Corbyn as Prime Minister, with his left wing cohorts, would send sentiments into a ‘tail spin’.
There is a possibility that there could be a leadership change in the Tory Party within the next six months but, even so, there may not be a need for the new Prime Minister to seek a mandate by ‘going to the country’.