One of London’s most prominent buying agencies says post-Brexit the interest in buying in the capital will return - whether there is or isn’t a deal negotiated by the government.
Black Brick is predicting that London is now seeing a ‘bottoming out’ of prices across prime central areas and this is reflected in a recent surge in enquiries.
The agency says that Brexit’s impact is likely to have overstated and that pent-up-demand, when it is finally released, will trigger a scramble for attractive properties.
“People like certainty and once Brexit is triggered, whether it’s a deal or no deal, it will bring certainty back to the market, which in turn will have a positive impact on the London property market” according to Camilla Dell, managing partner at the company.
She says that her firm saw double the number of new enquiries in August and September 2018, compared with the same period in 2017, and these were spread across nine different nationalities including the USA (24 per cent), UK (34 per cent), Saudi Arabia, UAE, Canada, Japan, India, Egypt and Germany (six per cent each).
When comparing this with the previous year, enquiries from the USA came in at 20 per cent whilst the UK was zero, demonstrating a shift from domestic buyers in the last 12 months.
Dell says the UK interest is largely from owner occupiers rather than investors. “This is because UK-based buyers are often more able to take a view on the twists and turns of the Brexit negotiations; for most of them, their future is in the UK regardless of Brexit or who is sitting in Number 10.”
But although Dell is upbeat about London’s sustained appeal to international buyers, she warns: ”Should the proposed additional stamp duty tax on foreign buyers it come into force, it will certainly impact overseas investment in the short to medium term, and possibly dissuade some wealthy buyers from spending well above £1m.”
She adds that this in turn will reduce the tax take, and possibly reduce development in London, as many developers rely on selling apartments off plan to foreigners in order to fund their developments in the first place.
For the moment, however, her single largest client base is from the United States.
“US based buyers have shown considerable interest in investing in London and this is something which has remained consistent over the last 18 to 24 months. We believe the demand from this nationality is coming from buyers who are taking advantage of the weak pound against the US dollar, from those with interests in the tech sector and other business links to the UK and lastly some US buyers are nervous about Trump and are diversifying outside of the US.”
She says that since the peak of the London housing market, in late 2014, sterling has fallen 19.25 per cent.
“Combine that with a drop in property prices of 15 to 20 per cent and dollar buyers today are able to make acquisitions for almost 40 per cent less than four years ago” she concludes.