11/20/2020 | Press release | Distributed by Public on 11/20/2020 09:50
Before Covid-19, prime central London's property market looked ripe for recovery. Our recent webinar aimed to help buyers, sellers, landlords, tenants and investors understand what's next for luxury residential property in the capital.
Here is a summary of the key questions asked and the replies from our experts.
Will the Chancellor extend the stamp duty holiday?
It's a possibility, but you'd be brave to call it a probability.
The Chancellor will face some pressure from those who miss out due to delays in the conveyancing process to extend or at least create a transition period for properties caught between sale agreed and completion.
However, the second lockdown in England will have required more government spending and the Chancellor will be looking at tax revenues to refill the coffers.
Is Brexit likely to affect house prices?
Brexit has largely been factored into the market already, contributing to the -21 per cent price falls from the 2014 peak.
The stock market expects trade deals to be struck. The Government will want to avoid further economic disruption and to promote anything that will allow the UK economy to gather pace.
Without a trade deal, the currency could weaken but that would make central London more interesting to international buyers.
Are London developers adapting to the demand for more room and green space?
London developers are already adapting to changing priorities but they will need to embrace flexible space fully, with multi-functional design and good IT infrastructure.
While developers already build club rooms and business centres, we believe they have an opportunity to innovate for the luxury residential space. Over the next few years, Edward Lewis, Savills Head of London Residential Development Sales, can imagine developers creating Soho House-style clubs, where residents can meet and work with like-minded people.
What types of properties are buyers looking for and what's selling?
Across prime central London, buyers are becoming a lot more property-specific than area-specific. While places like South Kensington, Notting Hill and St John's Wood have been very popular, we've also seen high levels of transactions in Wimbledon, Richmond and Wandsworth.
Buyers are looking for larger, lower-built properties with a garden in the more leafy neighbourhoods. They are also looking for amenities like a home gym and a swimming pool, so that they don't have to share facilities with other people.
For buyers of properties over £5 million, what percentage is from the UK?
The domestic purse has dominated sales this year. Across the market as a whole, 57 per cent of sales have been to UK buyers - 44 per cent higher than last year.
Despite fewer overseas buyers, transaction and deal activity has not slowed down. In fact, transaction levels in Q3 of 2020 were 76 per cent above the same quarter last year.
Still, the overseas market hasn't gone away. The key difference is that they are less likely to buy property on a whim. Instead, buyers are relocating their families to the UK and investing in a family home.
What does the prime central London rental market look like?
Following an increase in supply, particularly from the short-term lettings market, there has been some impact to rental values. Across prime central London, rents were down 2.3 per cent in Q3, taking annual growth to -4.7 per cent.
Demand from international students and corporate tenants has also decreased significantly due to travel restrictions and the uptake of remote working.
However, the super prime sector, where rents average £4,000 a week, has performed the strongest with many properties receiving competitive bids.
We're likely to see rental values rise over the next two years, depending how quickly we return to some version of normality. Across prime London, we expect that rental values will grow by 1 per cent in 2021 and 4.5 per cent in 2022.