Strutt & Parker’s quarterly residential report for Q2 2017 highlights the contrasting property markets in London and the wider country.
According to the Nationwide House Price Index (NHPI), overall UK property prices grew 2.8% year on year in Q2 2017. As Land Registry figures come in for the end of 2016, it can also be reported that country house market for properties over £2m, increased by 19.0% in terms of number of recorded properties sold compared to 2015. The majority of this growth was seen in the south east and south west.
Guy Robinson, Partner, Head of Regional Residential Agency at Strutt & Parker, said: “Over the past quarter we have seen a positive shift in buyer sentiment. We have some excellent stock on our books and new applicants are up nearly 5% year on year. When we look at the average number of applicants we have per property across the UK, it’s higher than it has been at any point since 2012. More prospective buyers lead to higher viewing numbers, which should generate an increase in sales, which is very encouraging.”
In contrast, quarterly figures show that London as a whole suffered a significant price decrease of
-2.0% during Q2 2017 (NHPI). Transactions in Prime Central London (PCL) are up on the same period last year by 24.3%. However, total transactions actually decreased by -3.5% in comparison to the previous quarter and is -22.7% below the five-year average for Q2. Nevertheless, it is worth noting that London house prices are currently 55.8% above the 2007 peak (NHPI).
Much of the downward pressure on PCL house prices because of Brexit and Stamp Duty changes has likely already been experienced and although the UK and the world remain in a period of substantial economic and political uncertainty, the outlook for the UK remains reasonable. Transaction levels in PCL reportedly picked up slightly at the end of 2016 and through the first quarter of 2017 in PCL, however, they remain low by historic standards.
Charlie Willis, Partner, Head of London Residential Agency at Strutt & Parker, said: “Transaction levels in PCL, across all price bands, are up on this time last year and this uptick in volumes is very welcome. However, the values being achieved are lower than they have been – savvy buyers are choosing now to take advantage of current pricing. Whilst one might have expected more transactions from overseas buyers due to the currency benefits currently at play, domestic buyers are the most prolific. We expect prices to remain flat for the rest of 2017 and into 2018 which we hope could spur further activity.”
Strutt & Parker, alongside its economic forecasters Volterra, is forecasting 0.0% growth in PCL in 2017 as a best case scenario (with downside risk at -5.0%) and 3.0% growth for 2017 across the UK.
Vanessa Hale, Partner in Research at Strutt & Parker, said: “Surprisingly the UK economy has been more resilient than anticipated considering the political uncertainty over the past 12 months. As consumer and business confidence begins to wobble, supply for new housing is still extraordinarily low and demand has not significantly dipped. Therefore, even though the market may now be faced with increased inflation and weak household income growth, cheap credit conditions remain and consequently properly priced correctly will continue to transact.”
Read the full report here.