THREE MONTHS AFTER BREXIT
Three months after Brexit, enough time has passed to properly assess the impact on the London property market.
Interestingly, recent reports suggest that it may have been stamp duty which proved the bigger value destroyer, with sterling’s depreciation post the Brexit vote actually helping to stymie prices in prime locations.
Property specialists suggest:
The stamp duty increase in December 2014 was the biggest factor that curbed demand in the 18 months before the referendum, seen as a political manoeuvre by George Osborne, the former Chancellor, ahead of a general election.
Compounded by the introduction of the additional rate of stamp duty equating to 3% for buy-to-let properties and second home buyers in April this year, this measure has loomed larger than any other over the market. The result of this two-year slowdown is that vendors were already adapting to the new pricing environment and in many cases Brexit became a trigger to make overdue reductions to asking prices.
Many buyers have sought asking price reductions in the two months since the vote while the majority of sellers are adopting a wait-and-see approach though low to mid-single digit declines are common. There is no uniform picture, and where asking prices were set at realistic levels before the EU vote, transactions have been achieved at or around the asking price.
Currency is also playing a more significant role, with the weaker pound spurring interest from buyers denominated in foreign currencies. The volatility of sterling in the past few weeks is leading many to speculate that overseas interest in the London market will filter through more strongly when there is greater confidence that the pound has hit its low point.
The government increasingly relies on London for its Stamp Duty revenue, to the sum of £6bn a year. While London’s contributions rose to 44.6% in the year to March 2016 from 41.5% a year earlier, London only accounted for 12.3% of transactions, down from 12.7%. That’s problematic for another reason as the picture emerging is one of growing fiscal reliance on areas where transactions are shrinking at the steepest rate.
Locally prices have dropped 5-6% since Brexit and therefore clear, accurate pricing from the onset of marketing is vital to secure a successful sale. Please call the office to make an appointment for me to meet you in your home to discuss market prospects and a professional strategy to sell your home.
Geoffrey Stiff FNAEA MARLA, Director
Hoveden Road, Mapesbury, London, NW2
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