London’s prime property market had a lukewarm June, with sales slumping by 17% compared to last year. Experts are pointing fingers at the recent election and sky-high mortgage rates for scaring away deep-pocketed buyers.
The uncertainty surrounding the election seems to have made wealthy homebuyers hit the pause button on splashing out on luxury pads. Many were holding back, waiting to see what the new government would do.
Mark Pollack, at Aston Chase, reckons this hesitation might actually be a good thing: “A lot of buyers postponed plans due to a combination of high interest rates and political uncertainty, which will have resulted in a degree of pent-up demand… I suspect this will help to maintain market stability [during the usual summer slowdown].”
Mortgage Mayhem Bites London Homeowners
On top of election wobbles, mortgage rates have gone through the roof. London homeowners are now forking out 48% more on their mortgage payments compared to just three years ago. That means an eye-watering average bill of £23,000 a year!
Across England and Wales, a staggering 3.5 million homeowners have remortgaged in the last year alone, shelling out a total of £8.8 billion in loan payments.
Prime Property Piles Up as Buyers Play the Waiting Game
With buyers hesitant, the number of posh properties sitting on the market shot up. There were 12.7% more prime London homes up for grabs at the end of June compared to the previous year.
Nick Gregori, at LonRes, sums up the mood: “June was a quiet month for the prime London sales market, with activity down on all our main metrics. We know many buyers and sellers are playing a waiting game – mainly hoping for better economic news and political stability – and the General Election campaign is likely to have added to this sense of caution.”
Hope on the Horizon?
The good news is that with the election done and dusted, there’s a glimmer of hope. A new government often brings a boost of confidence, and that could spill over into the property market.
Jeremy Gee, from Beauchamp Estates, believes things are looking up: “People [who refrained from buying before the election] will now re-enter the homebuying market after the new government is formed… they know what the new administration intends to do regarding taxation and other policy announcements.”
Super-Prime Slowdown – Are Mega Mansions Losing Their Shine?
The really pricey end of the market – we’re talking properties going for a cool £5 million or more – has been hit particularly hard. Sales in this bracket nosedived by over 20% compared to last year, while the number of new listings jumped by 25%.
Experts reckon changes to tax rules for wealthy foreigners are partly to blame. These changes seem to be making London less appealing to international big spenders.
What’s Next for London’s Luxury Property Market?
While the short-term outlook remains uncertain, the general feeling is that things will eventually pick up. Once the dust settles from the election and the economy finds its footing, buyers might just be tempted back into the game. But for now, it seems like London’s luxury property market is in a bit of a holding pattern.