Central London property buyers seem to no longer be phased by “the Brexit dip” following the victory for the Conservatives in the general election, with sales increasing by 34 per cent in last quarter of 2019 compared to the same period the previous year.
New research from property data firm LonRes shows that central London house prices rose 2.4 per cent in Q4 2019 following five consecutive quarters of price falls, driven by three years of Brexit turmoil.
The report found the increase in sales was most pronounced on homes costing over £5 million (Dh 24m), where there was a 78 per cent increase compared to the fourth quarter of 2018. This followed a slow third quarter of 2019, when deals over £5 million fell by 33 per cent on the same period a year earlier as buyers held off, due to uncertainty over the British general election and Brexit. Property buyers also held off due to potential changes to stamp duty rates mooted by the government.
"The market was improving prior to the election but the result has sustained activity. In the second half of 2019 despite political uncertainty buyers were seeing value in prime central London and started to return," Marcus Dixon, head of research at LonRes told The National.
“For overseas buyers too a weaker sterling created buying opportunities,” Mr Dixon added.
In the run up to the general election on December 12, the opposition Labour party said in its manifesto that it would tax holiday homes an extra £3,200 a year each. Such a move may have stoked fear for some property buyers in the capital.
For properties over £5m the increase in activity was not matched by rising prices in the final quarter, with buyers paying on average 4.5 per cent less per square foot than in Q4 2018.
Properties priced between £2m and £5m increased by 41.7 per cent in the final quarter of last year compared to the corresponding period in 2018, while prices rose 3.2 per cent.
Properties priced under £2m increased by 19.7 per cent year-on-year, but the market saw a 3.3 per cent fall in achieved prices.
The number of homes sold in the final quarter of 2019 was up 20 per cent compared with the same three months last year.
Mr Dixon said: “Undoubtedly there were sales in Q4 that would have ordinarily gone through in Q3, yet comparing the second half of 2019 with 2018 still shows a 19 per cent increase in sales volumes.
“Fewer [available] properties, with sustained levels of demand helped push up average prices which increased by 2.4 per cent across prime central London in Q4 2019 compared with the last three months of 2018. This represented the first annual increase for six quarters.
A fourth quarter survey from LonRes subscribers seen by The National found that nearly 40 per cent of participants said demand from the Middle East had increased from the same time last year. 45.4 per cent thought demand from the region had stayed the same while only 16 per cent believed it had decreased.
Another survey on Thursday gave a promising outlook for London house prices, indicating that the capital was benefiting from a post-election relief spike. The Royal Institution of Chartered Surveyors (RICS) reported that the number of surveyors reporting new buyer enquiries jumped to its highest level since January 2016.