Looming Brexit Deadline Transforms London’s Luxury Real Estate Into a Buyer’s Market
After years of uncertainty prompted by the stamp duty and Brexit, the number of potential buyers for London’s luxury homes is finally starting to edge up, according to a report Monday by Knight Frank.
While the number of sales priced at £10 million (US$12.85 million) or higher fell year-over-year, from 133 to 121 total transactions, there’s been a 7% uptick in the number of prospective buyers. Additionally, the value of the homes sold grew by 22% year-over-year—amounting to £707 million.
“It shows there is still a pretty strong underlying demand for the market, and for London property, despite the political backdrop,” said Tom Bill, head of London residential research at Knight Frank. “Buyers are poised to act, and there is some pretty good transaction activity” in the super-luxury home range, he said.
This pent-up demand is helping boost the super-luxury market, but uncertainty about Brexit and stamp duty remain for most buyers.
Much of the growth in the £10 million-plus range is being “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,” said Tom van Straubenzee, head of private office at Knight Frank, in the report.
Many of these “needs-based” buyers are motivated by recent price reductions to move now. The nearly 30% year-over-year increase in viewings comes amid price reductions, according to the report. Homes priced higher than £10 million have had their prices cut by 9% since their last peak in September 2015 as a result of the stamp duty put in place the year before.
In the meantime, prospective buyers are continuing to look. They’re proceeding with caution because of the political backdrop primarily” because “the shape of Brexit is still a bit of an unknown,” Mr. Bill said.