With a looming general election and shifting global dynamics, London's prime property market is a stage of intriguing trends in 2024. Let's delve into the trends of this high-end sector, exploring buyer sentiments, evolving preferences, and the impact of policy shifts.
Steadfast Buyers in the Face of Political Uncertainty
Despite the political climate, prime buyers remain resolute in their property pursuits. A recent survey by Savills reveals an impressive 79% of respondents maintaining their moving plans, with 13% even showing a heightened desire to purchase within the next year. This unwavering commitment underscores a deep-seated buyer confidence. The recent Israel war could have an inverse impact on the mortgage and property market although the buyer rush to purchase before the election persists in Q1.
Trends in Property Preferences and Mortgage Choices
The influence of the pandemic on property preferences seems to be waning, with buyers returning to traditional criteria such as square footage and bedroom count. Interestingly, there's a growing preference for shorter-term, two-year fixed mortgages, possibly driven by expectations of further interest rate adjustments. The ease in inflation has somewhat eased buyer sentiment. But Frasers has observed that buyers that are less sensitive to mortgage changes have had the most completions and exchanges. This buyer segment is ready to purchase outright. This is even true for the rental market, where cash rich renters are more responsive and faster to agree on lets.
A Rush Before the Storm: Pre-Election Surge Expected
As the election draws nearer, experts anticipate increased activity in the market's first half. This "front-loaded" surge, as predicted by Prime Purchase, reflects a race against time to finalise deals before potential policy alterations under a new government. Already, high-value transactions are on the rise, indicating a proactive approach by buyers in uncertain times.
The Return of Overseas Investors
London's appeal for overseas investors remains strong, due to factors such as relative value and attractive investment opportunities. Despite a slight slowdown in some areas, international interest in the capital persists. Luxury developments like The OWO and The Whiteley boost the city's appeal on the global stage.
Navigating Policy Shifts: Impact of Tax Reforms
The upcoming abolition of the non-domiciled tax regime presents a notable challenge. Historically, this regime has attracted wealthy overseas individuals with its generous tax incentives. While its removal may prompt some to seek alternatives abroad, others may opt to stay.
An Outlook of Cautious Optimism
Amidst the uncertainties, a cautiously optimistic outlook prevails. With inflation in check and the possibility of interest rate adjustments looming, the market's underlying resilience shines through. Savills' survey results show a significant commitment to move from buyers within the next six months, indicative the potential for growth despite current challenges.
Rightmove's Insights: Optimism in Projected Sales
According to Rightmove’s data, the projected sales agreed this year is higher than 1 million, with March already witnessing a 13% increase in sales agreed. This increase is because the market is led by those less sensitive to mortgage rates, particularly in the top-tier sector where sales have surged by 18%. Moreover, buyers are increasingly investing in larger homes. Overall, there is an 8% increase in all property sales since March 2023.
While overall market activity may exhibit a slowdown, London's £5 million-plus sector stands out with remarkable resilience. April saw a rebound in luxury sales, defying expectations of a downturn. Despite modest decreases in available properties, sales volume in this segment has sustained.
Frasers' Data Reflects Growing Interest in Luxury Properties
Further corroborating the market's resilience, Frasers' own data indicates a notable 15% increase in interest in luxury property transactions. This surge in interest encompasses both buying and selling activities, suggesting a vibrant and dynamic luxury property market. Even the luxury rental sector shows signs of movement after a sluggish period, with increased activity compared to the previous year.
Despite external pressures, buyer confidence remains steadfast, supported by evolving preferences and global investment interest. While challenges loom, the luxury sector continues to defy expectations, showcasing the enduring appeal of London's premier real estate offerings. As the market navigates through political transitions and policy shifts, all signs hint at more optimism from buyers.
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