What do upmarket estate agents feel about the overall property market scenario in London? Well, the majority of them believe that the EU (European Union) referendum and increased taxes brought incredible pessimism in the property markets of the capital city.
Last year, sellers had to accept realistic offers as people did not want to spend exorbitantly. Does it mean the decision of moving out from the union hit the upper crust only? It seems yes because the lower and middle category properties didn’t face massive price drop.
There was a slack season for low-priced properties as well, but in absolute value wise they were not the major sufferers. The price drop in high-rated properties was around 7 percent in the prime areas of London, which was two percent more than last year. Amongst other non-prime areas, the drop was 5 percent.
Large retail funds close the portfolios
It has been observed that many big names in the retail fund have closed the portfolios. Some are in the process of doing the same. It is the effect of EU referendum. Large-scale redemptions from investors were recorder in 2016 which was an obvious outcome.
Many property income funds diverted their cash from other sources to meet the redemption requests. Even if they imposed an exit fee on it, there was no significant drop in the number.
Data analysts say that investors who did not request for redemption have incurred loss up to 2 percent so far.
The dampening effect of Brexit Vote
You ask the estate experts about the impact of Brexit, and they will say that the fall in the number of sales immediately after the decision decelerated after some time. It happened because sellers actually reduced the prices to accommodate the increased cost of stamp duty.
Of course, it is a loss to them. However, the sellers are ready to bear it in anticipation of selling the property fast.
The step slightly eased the situation, but there is still a long way to go. As the second homes will carry a 3 percent duty surcharge post 1st April, March was the busiest month for real estate traders.
Before Brexit, the market was in full swing. After Brexit, there was a slump, and still, the market hasn’t been able to recover from it.
The post-summer period may bring a surge but still it is difficult to attain the earlier levels. Since the sellers have also realized that it is better to be realistic instead of over-enthusiastic; they will keep the prices low.
A data fact can make you understand the severity of the situation. There has been a huge 20 percent drop in the number of sales clocked by properties worth more than One Million GBP. Similarly, homes worth 5Million GBP ad above were sold 15 percent less than last year.
The charming property market of London suffered a lot due to Brexit. It used to be quite lucrative once upon a time. Investors and property dealers are still hopeful for a steady recovery.