International property consultant Knight Frank is reporting this week that political uncertainty in the UK continues to dominate sentiment in prime London residential markets in final months of 2019.
By mid-October, there were signs the EU and the UK were moving closer to signing a withdrawal agreement.
However, irrespective of the political backdrop, transaction activity has been on an upwards trajectory in PCL. Knight Frank carried out 11% more transactions in prime central London between January and September 2019 compared to last year. In prime outer London, transaction volumes were broadly flat compared to last year.
The trend is due to a combination of factors that include the stamp duty-related price adjustments and the Sterling discount, which have had a more pronounced effect in PCL. Meanwhile, activity is also being driven by a prolonged build-up of demand and the ultra-low cost of debt. Prices have now declined by an average of 14% over the last four years in PCL, which more than compensates for higher rates of stamp duty. When combined with the effects of a weaker Sterling, overall discounts of more than 25% are available for buyers denominated in a range of overseas currencies compared to June 2016.
The ratio of new prospective buyers to new property listings was 14 in September in prime central and prime outer London, the highest level in more than ten years, indicating the strength of pent-up demand. Meanwhile, the total available potential spend of all prospective buyers of existing homes registered with Knight Frank in London rose to £55 billion in Q3 2019.
At the same time, the number of new listings above £1 million in PCL declined 28% in the year to September, as more vendors hesitated due to Brexit-related uncertainty. This imbalance between supply and demand means the rate of price declines has moderated.
Average prices for existing homes in PCL fell 3.9% in the year to September 2019, the smallest decline in 12 months. The 3.5% decline in prime outer London was the most modest decline since May 2018.
London has also reinforced its position as the leading global investment hub, extending its lead as the largest global centre for currency trading, according to the Bank for International Settlements, underlining its long-term credentials as a dominant global finance hub, irrespective of short-term political turbulence.