Prime Resi: Domestic buyers rise to `new level of prominence? in the London market
Thu 19 Nov 2015
The proportion of sales to overseas buyers in London has fallen to 21%, according to Marsh & Parsons, as recenttax changes continue take their toll on international demand.
The strong sterling, changes to non-dom status, and heftier Stamp Duty at the top end have all combined tobreed new caution amongst overseas buyers, says the firm, with the proportion falling quarter-on-quarter, anddown from 25% of all sales in London during Q4 2014.
Much the same thing appears to be happening in prime central London, the traditional mainstay of the overseaspurchaser. The proportion of foreign buyers here now stands at 32%, down from 34% in Q2 and 37% a year ago.
Investors have also gone off the boil over the past three months, accounting for just 35% of all PCL sales duringQ3, down from from 42% in Q2.
Domestic buyers have surged forwards to fill the gap, however, and the firm has actually seen the number ofregistered buyers across London climb by 4% over the last quarter. This is combining with a 5% drop in supply tobuild up some stiff competition by the sounds of things.
Prices are back in positive territory and continued a steady recovery throughout Q3, with average values acrossthe capital climbing 0.3% in three months. PCL fared slightly better with growth of 0.4%, although the firmhighlights an interesting stat the premium paid for PCL property has shrunk from 98% to 74% over the last two
One-beds in PCL have been the star performers, appreciating in value by 5.9% over Q3, while four-beds acrossthe capital have only managed 0.5%. In terms of locations, Pimlico and Westminster are picked out as thehottest ticket in town, with the fastest increase in house prices over the last year (5%), ahead of second-placedEarls Court (3%). The average price per square foot across Prime London now stands at 1215, rising to 1590 inPCL (the Outer Prime average is now 890).
Looking ahead, the team is predicting a flat Q4, followed by 4% growth for prime London next year. Outer Primelooks set to see 5%, with PCL in line for 3%.
Peter Rollings, CEO of Marsh & Parsons: The London property market has had to grit its teeth and bear thebrunt of some rather trying taxation changes in recent months. At the high-end buyers are at the rock face of thenew steeper stamp duty, and from overseas the strength of sterling, and government encroachments onnom-dom status make investing in the London property market seem daunting. This has cast some shadows overthe capital, but the millions of Londoners who live and work in the city have acclimatised much more quickly to
the property taxation changes, and have risen up to fill the void left by overseas purchasers and investors. Werenoticing longer purchase chains than ever as domestic buyers really start to dominate the market, and demand isreally putting a strain on supply. This should ensure that London houses prices and sales activity continue their
ascent into 2016.
The sudden price surge in Outer Prime areas over the past two years has really come to challenge what weconsider the Prime property heartland of London, and the reality now is that the epicentre of the capitals housingmarket is expanding outwards. Properties in the traditional Prime Central stronghold will ultimately always hold
their value, but after 24 months of relative price stagnation, it requires much less of a price leap than it did a fewyears previously, after such stellar price rises in the Outer areas of the city. We expect property further out fromthe centre to make the strongest gains before the end of the year, mirroring the trend evident across the capital
as a whole. Properties at the lower end of spectrum have accumulated the strongest price momentum, and this isunlikely to dissipate.
Prime London Property Price Movements