Prime Central London property markets to recover in 2017
2017 will be a year of stability for residential sales and lettings.
London's prime housing markets are already on the road to recovery.
After a turbulent year that saw Brexit and an increase in stamp duty shake the confidence of investors, recent trends suggest these shocks have been absorbed.
New market research from JLL reveals improvements across the board for London's residential markets in the final quarter of 2016. While the markets are still down compared to 2015 levels, the forecast for 2017 is bright.
Property sales in Prime Central London increased by an estimated 36 percent between Q3 and Q4 2016.
This was after transactions fell to just 500 purchases per quarter on either side of the EU referendum – the lowest since the 2009 financial crisis.
Demand for properties grew both domestically and internationally, with overseas buyers from emerging economies such as Turkey and Thailand taking advantage of the weak pound.
Transaction volumes are expected to continue their upswing throughout 2017.
London house prices continued to fall in Q4 2016, but at a significantly lower rate of decline compared to earlier in the year – just 0.1 percent on average.
Higher-value properties are already bucking this trend, with prices remaining broadly flat in the sub-£2 million and £2–5 million housing brackets.
Lower-price brackets are expected to catch up soon, and average prices should remain relatively flat across the year before rising in 2018.
However, this means the markets are currently very price-sensitive. Sellers must be vigilant that their property prices accurately reflect the latest market conditions.
Rental values stabilize
Central London rent prices should remain stable this year before rising in 2018.
While demand for rental properties in Prime Central London is improving, the surplus of properties now available gives tenants the upper hand when negotiating a price they're happy with. If they don't find it, they're likely to look outside the region.
Oversupply is an issue for large houses and other high-end properties, which can take longer to let at the prices required.
A positive outlook
Neil Chegwidden, Director of Residential Research at JLL UK, believes this research shows a clear resurgence of confidence in London's property markets after the widespread uncertainty of 2016.
“Sales and lettings markets in Prime Central London have entered 2017 in a more optimistic mood,” he says. “Both have suffered from price falls and an overhang of properties on the market during 2016. But with price adjustments from stamp duty changes now largely absorbed, the outlook is more promising.”
Although 2017 will present its own share of obstacles – most notably the ongoing discussions over Brexit – their impacts on buyer confidence are expected to be less severe than last year.
“Nevertheless, with Brexit negotiations still ahead of us, 2017 will be a year of market stabilization,” Chegwidden adds. “We expect prices to remain steady, but forecast activity to increase.”
To find out more about the latest market forecasts for London and other international cities, contact JLL International Properties by click here or call at +852 3759 0909/ email to: firstname.lastname@example.org.