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“Despite the low likelihood of a change of government and continued market activity, the general election has led to some caution in the market, with some first-choice buyers choosing to wait and see how events unfold over the next couple of weeks before consolidating plans,” said Frances McDonald, research director at Savills, whose latest analysis of the UK market shows the residential sector has been relatively resilient in the run-up to the election.
Despite this, however, price growth has temporarily stalled. “Given the shorter-than-expected pre-election period, buyer demand will have a better chance of making its way in the fall, when most of the uncertainty will be behind us,” McDonald continues.
In central London, prices fell slightly, by -0.4% in the second quarter and -0.9% for the year, representing an average drop in value of just £20,000 for a £5m property over the last three months.
“The impact of the changes to the foreigner tax is likely to be felt most in central London, where prospective buyers are weighing up their options. But it is important to remember that the majority of central London buyers do not have non-dom status. Demand from domestic and international buyers continues to be strong, especially given the value on offer in a historical context, as well as the increasing stability of the mortgage market, with some lenders starting to lower rates early.”
“Furthermore,” the researcher adds, “there is no evidence to suggest that there will be a flood of stock coming onto the market, as many of those affected by the changes to the no-application regime are likely to remain based in the capital. However, this is likely to act as a dampener on demand and the pace of recovery, with the expectation that the value will continue to rise as the proposals become law.”
