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If life is like a box of chocolates, then residential property this year has been a particularly mixed assortment \u2014 some delicious, some nutty, and a few best left untouched.<\/p>\n
It would be fair to say that this has not been an easy year for the Residential Property Market. That said, I struggle to share the media\u2019s apparent enthusiasm for declaring a cataclysmic collapse in values. In reality, the low to middle markets have behaved with surprising decorum. The top end, admittedly, has been less cheerful since the government decided to give the non-dom regime a good kicking \u2014 with all the finesse one might expect.<\/p>\n
Our perennial challenge, regardless of price bracket, remains persuading vendors to quote an asking price within touching distance (say, 5%) of genuine, bankable market value. This is not helped by the presence of rival agents who, like \u2018rats in a sack\u2019, compete fiercely in a flattering Olympics \u2014 promising sellers prices that have little to do with reality and even less to do with achieving a sale.<\/p>\n
These agents know perfectly well that such prices may lead to years of inertia but serving their selfish interests by gaining the instruction on the property, seems to be the over-riding priority. Market sense, sadly, does not always get a seat at the table.<\/p>\n
Unsurprisingly, these fanciful expectations are eventually crushed by the market, where buyers vote not with words but with their feet. We currently have properties that have been \u2018for sale\u2019 for four or five years \u2014 monuments to optimism \u2014 waiting patiently for their owners to \u2018wake up and smell the coffee\u2019.<\/p>\n
Where the golden rule of respecting underlying value has been observed, the mid-market continues to tick along quite sensibly, with sales completing within a few percentage points of realistic guide prices. Boring perhaps \u2014 but welcome in these challenging times.<\/p>\n
The four or five months preceding this year\u2019s Budget were marked by a collective intake of breath. Mansion Tax, Exit Tax, higher Capital Gains, Inheritance Tax, pension reform \u2014 all were whispered with the reverence normally reserved for horror films, but thankfully blissfully absent from the Budget. And when people are frightened, they do what they do best: absolutely nothing. Transactions duly dried up. One rumour suggested Stamp Duty might be abolished \u2014 a false dawn to add to the growing collection.<\/p>\n
Even so, I do not believe mid-range values are down by more than 5\u201310% from the halcyon days of two years ago. Indeed, in a few isolated cases, we have achieved prices that history itself might struggle to improve upon.<\/p>\n
Helpfully, interest rates are now heading south by the latest Bank of England revision (BoE) this week, assisted by a slowing economy and easing inflation. Five-year fixed rates are in the low 4% range, with some flirting with 3.7\u20133.8%. Even 25-year mortgages are available at around 4.19%, which feels almost nostalgic when one recalls the 6.6% peak of 2023.<\/p>\n
In the \u00a31\u20133 million range, values have softened by a similar 5\u201310%, but I suspect 2026 will be kinder \u2014 steady rather than spectacular, with neither boom nor bust to keep dinner-party conversations alive.<\/p>\n
While there are no fiscal surprises scheduled until autumn 2026, political turbulence seems inevitable after the May elections next year, when Labour will almost certainly receive a predictable drubbing. A change of Prime Minister is unlikely to shift market sentiment materially \u2014 though history cautions us to be careful what we wish for.<\/p>\n
The real headache lies above \u00a310 million, where buyers are thinner on the ground. Thanks to the government\u2019s non-dom reforms over the past 18 months, the UK has enjoyed one of the world\u2019s largest wealth exoduses \u2014 second only to China, which is no small achievement.<\/p>\n
That said, not all wealthy individuals have fled. Many families in St John\u2019s Wood and Hampstead remain firmly in place while children finish school. Husbands observe the 90-day rule with religious discipline, keeping earnings and wealth safely beyond HMRC\u2019s reach.<\/p>\n
The private dining clubs of prime central London \u2014 once bustling \u2014 are now noticeably quieter. Tables are easier to book.<\/p>\n
One could argue that Rachel Reeves has done more to stimulate prime property markets in Dubai, Milan, Lisbon, Geneva, and Monte Carlo than any overseas trade envoy. If only that were meant as a compliment.<\/p>\n
London, however, retains its magnetic pull. Buyers from the US, Eastern Europe and the Middle East still appear, seeking landmark homes \u2014 though not in the numbers we once knew.<\/p>\n
Curiously, despite thinner demand at the top, we are not drowning in supply. Turnkey houses \u2014 where buyers can arrive with luggage and live the dream \u2014 remain scarce. As a result, values across north-west London are down by around 10%, but not dramatically more.<\/p>\n
Much is made of sales at One Hyde Park reportedly achieving 50% of asking price. In my view, this says more about the collapse of fantasy pricing than about true value. Similarly, 2\u20138 Rutland Gate \u2014 all 45 rooms of it \u2014 was exuberantly overbought in 2020 for \u00a3210 million. Achieving 75% of that figure today would be optimistic.<\/p>\n
We are also seeing more \u2018empty nesters\u2019 selling large family homes and opting for long-term lateral rentals instead of buying again. They are unconcerned about missing out on runaway capital growth \u2014 a mindset reminiscent of the 1960s, when renting fine homes was entirely respectable.<\/p>\n
The rental market between \u00a3500 and \u00a31,500 per week has strengthened by around 10%, thanks to dwindling supply as buy-to-let landlords exit ahead of Renters\u2019 Rights reforms. The irony is that increased regulation has made life harder for those it was meant to protect \u2014 the poorest tenants paying the highest price. Go figure.<\/p>\n
At the very top end of the rental market, we have been rather busy. Recently, we achieved close to \u00a340,000 per week for a newly built house in the Kenwood area \u2014 a genuinely seismic event. The Scandinavian tenant, sourced through our global contacts, neatly avoided Stamp Duty of around 17%, thereby enjoying approximately five years\u2019 worth of \u2018free rent,\u2019 courtesy of His Majesty\u2019s Exchequer.<\/p>\n
Stamp Duty, it seems, can be relatively easily circumvented by this process \u2014 presumably not the Chancellor\u2019s intention, but there we are.<\/p>\n
In conclusion, 2026 looks likely to be a year of \u2018steady as she goes\u2019 \u2014 assuming progress in Ukraine and no nasty surprises from global capital markets.<\/p>\n
In property, as in life, those who keep their sense of humour usually fare best.<\/p>\n
By Trevor Abrahmsohn, Glentree International\u00a0<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" If life is like a box of chocolates, then residential property this year has been a particularly mixed assortment \u2014 some delicious, some nutty, and a few best left untouched. It would be fair to say that this has not … Continue reading