The General Election and Prime Property:
Relief and a thriving future by Simon Barnes
“There was a huge sigh of relief as a great deal of uncertainty was almost instantly lifted from the prime property market in London, with the news of a majority vote for the Conservatives and the reassurance of a five year term in power. Confidence is important and there is a strongly held view that the Conservatives do not punish the rich and will support businesses and investors.
Markets dislike uncertainty, and the threat of a mansion tax, proposals on non-domicile status and changes to property taxes, had caused a bottleneck for both buyers and sellers. Now that this has been released, we are likely to see an upturn in sales over the forthcoming months, together with increased prices before the market settles down to steady growth, hopefully for several years.
The industry is undoubtedly relieved, and people who have used the election as an excuse to hold off buying and selling will now act. However, the reality is that the super prime London property market (£20m – £40m) is less impacted by such uncertainties than property in the lower price range of £2m – £5m.
Overseas buyers and property investors see London as a stable market, less effected by national or international changes than most other countries. Variables such as fluctuating oil prices, the forthcoming EU referendum and sanctions against Russia have caused and will continue to cause some buyers to hold off. Similarly, the possibility of larger profits after an event such as the general election, will result in some sellers waiting in the expectation and hope of achieving higher prices. Nonetheless, there is no reason to believe that the super prime market is adversely affected by these factors or by future events, both anticipated and as yet unknown.
The super wealthy want to live in London and want to invest in London property. If Russians are not buying, then buyers will come from the Middle East. If the market is less attractive to European buyers, it may well be more attractive to Chinese. It would be foolish to say that this pattern will last forever, but it has been the reality for some time now and, with the emergence of new markets and buyers from Africa and South America, it looks set to continue for the foreseeable future.
With the election, as in life, biting the hand that feeds you is ill advised. Over the last nine months, the threat of further taxing rich investors and property owners risked cutting off a huge supply chain in London. Regeneration projects, new building and associated infrastructure all require the confidence of businesses, investors and developers.
The election outcome and the enduring appeal of London to overseas buyers, instils a sentiment of confidence, ensuring continued International interest in the UK as a safe place to invest. London will continue to thrive and grow.”
Simon Barnes Property Consultants