Parts of prime property market in London hit by economic uncertainty
Some areas in London’s prime property market are experiencing falls in demand from international buyers for reasons of global economic uncertainly, according to a new analysis report.
But this is making way for emerging markets in the capital city’s prime sector which are currently outperforming central London, according to the report from property buying agency Black Brick.
This comes at a time when overall London’s housing market is set to see increased demand with the population forecast to grow to 10 million.
The report suggests that continued local opposition to new developments and limited brownfield sites for new homes developers in London will struggle to meet building targets which will leave the rental sector to take up the slack.
Prices currently vary considerably in the prime market with locations in Knightsbridge and South Kensington seeing prices fall but emerging prime areas such as Islington and the City and Fringe have performed strongly.
The reason is straightforward, according to Camilla Dell, Black Brick managing partner. ‘Those areas dominated by international buyers have suffered from falls in demand as a result of global uncertainty around falling oil prices, sanctions on Russia, and the slowdown in the Chinese economy, among other factors,’ she said.
‘Conversely, those parts of London, where demand is driven by domestic buyers, have benefited from the perennial shortage of supply and the strong recent performance of the UK economy,’ she explained.
‘In addition, recent changes to taxation have reduced the appeal of more expensive properties; investors seeking attractive rental yields and the prospect of capital appreciation have been pushed towards properties below £2 million, which tends to lead them away from traditional prime areas in West London,’ she added.
Dell also pointed out that this complex picture has two related implications for buyers; the first is that they need to cast their nets more widely when carrying out a search; and the second is that they need to consider areas of which they might not have much knowledge.
‘The upshot is that we’re seeing considerable interest from investors in parts of London they aren’t familiar with and they need a buying agent that not only offers broader geographical coverage, but also brings extensive knowledge of emerging prime locations,’ Dell said.
‘In a market that’s going up, it’s hard to make a bad decision, but in a market like this, good guidance is really important,’ she concluded.