London home prices to stay flat amid political uncertainty, says Knight Frank
With uncertainties abound over a hung parliament in the UK, residential property prices in London are likely to stay flat this year, according to property consultancy Knight Frank.
Alistair Elliott, senior partner and group chairman, said the residential market in London will be more active this year but there will be little price movement, given the uncertainties stemming from Prime Minister Theresa May’s failure to win a parliamentary majority earlier this month.
“I don’t see any great rises in pricing but I think the volume will be better than last year. There will be more trading but the level of pricing will be pretty static,” he said, “[That’s because] I believe there is some general caution about the prospect of what Brexit really means.
“I think there are developers in London who are sensible enough to take a good deal now rather than trying to be too aggressive about getting a higher price. So I think people will be competitive in their approach to selling.”
He added that developers are unlikely to chase after high prices because they are satisfied reaping the benefits of the double-digit growth the market has enjoyed over the last four years.
Investors from Hong Kong and Singapore have been particularly keen on investing in London’s property market. Recent research carried out by the University of York and the London School of Economics for London’s mayor – considered the most comprehensive survey yet of international investment in the city’s housing – revealed that foreign buyers snapped up 3,600 of London’s 28,000 newly built homes between 2014 and 2016, which amounts to about 13 per cent of the market.
The research showed that buyers from Hong Kong and Singapore accounted for almost half of all transactions by foreign buyers, followed by Malaysia and China.
Foreign investors are said to be using units in London as buy-to-let investments, often holding them in offshore tax havens – something that has drawn flak from Londoners, who are calling for their government to block foreign buyers so as to make housing more available for locals.
Elliott said Asian buyers have been “an increasing influence” in the residential market in the last few years. But he said the proportion of overseas buyers – 13 per cent in the total market – is still “manageable”.
“I suspect there is an element of pure speculation,” he said, “[The government’s intervention] must be done in a very balanced way so as not to deter genuine medium- and long-term investors and genuine home buyers.”
But the uncertainty arising from the UK general election appears to have rubbed off on Hong Kong property investors. Fewer people than expected turned up for the first London property exhibition held in Hong Kong earlier this month.