Agency heralds a 'Boris Effect' in prime London as buyers take a long-term view
"It looks like Boris [Johnson] has and will put the bounce back into the London property market", says top-end estate agent Mark Pollack
"The market, certainly in parts of London in which we operate, seems to be past its most recent low point both in terms of prices and transaction numbers," reports top-end estate agency Aston Chase. And there's more to come, as Mark Pollack's firm heralds a "Boris bounce-back" for the Prime Central London property market.
The Regent's Park-based agency saw a 25% drop in the total value of transactions in Q2 compared to Q1 this year – but Q2's £63m tally was still a chunky 47% above the same period last year. Enquiry numbers, meanwhile, increased by 10% between Q1 and Q2.
"There is little remaining doubt that whilst political uncertainty still reigns in the UK, long term home buyers are perceiving value in the market"
Such a hefty year-on-year change in the total transaction value allows the agency to call a turn-up for the market. "There is little remaining doubt that whilst political uncertainty still reigns in the UK, long term home buyers are perceiving value in the market," says Pollack's team, "and committing their medium to long term future to London."
Other prime London players have noticed similar positive movements in the last few months. Knight Frank recently reported a run of super-prime deals that have bolstered the whole PCL scene – while pent-up demand continues to build, meaning that the agency’s combined buyer budget in prime London has reached a five-year high. Savills, meanwhile, saw a "surprise return of competitive bidding and even a few sealed bids" in Q2. London Central Portfolio also picked up on a "surge" of activity in Q2, with 23% more transactions than the previous quarter – although volumes were still well below last year’s level (-13.1%), and the rolling 12-month tally is historically bleak.
Winkworth also saw a pick-up in transactions from Q1 to Q2 (+20%), although Q2 still came in 16% below the same period last year. The London-centric franchised estate agency network has seen a marked decline in new applicants; a 19% drop from Q1 to Q2 2019, and a 21% drop from Q2 2018 to Q2 2019…
European buyers seem to be more hesitant than others, says Aston Chase, but Q2 saw “an influx” of enquiries from the Far East (notably from embattled Hong Kong), Africa and the US. Overseas buyers have been attracted by Sterling’s continuing record weakness and – more contentiously – by the words of our now Prime Minister, Boris Johnson.
"The 'Boris effect' is instilling confidence back into the PCL property market," suggests Aston Chase, claiming that "several transactions in the past month" have completed "as a direct result" of new enquiries drawn-in by Johnson's promises of tax cuts that could turn the UK into some kind of tax haven. The agency says that 50% of its recent transactions have come from investors and foreign nationals who are "parking money" in the UK.
Domestic buyers, however, were still behind 60% of Aston Chase’s deals in Q2 this year.
The ten Georgian-inspired townhouses in St John’s Wood's Hamilton Drive scheme are "representative of the type of properties attracting foreign investors", says Aston Chase
"It looks like Boris has and will put the bounce back into the London property market"Mark Pollack, Aston Chase
The firm reports an average sale prices of £4.7m in Q2 – some 30% higher than in Q1, thanks to a goodly portion of those British buyers biting the bullet and snapping up a long-term family home. Taking a longer-term view means "they can assuage some of the Stamp Duty related pain, and give themselves room to grow", notes AC; "This is one trend which seems to be here to stay. Moving less, waiting longer between moves, and buying more long term homes."
Winkworth's CEO Dominic Agace does not attribute his agency’s most recent improvement in deal numbers to the new Prime Minister, but does suggest that Johnson's proposed SDLT reform "could lead to a positive uptake in transactions further down the line." But. While BoJo's talk of "slashing Stamp Duty" may have won him some (cautious) fans in the prime property sector, there are some concerns that promising future SDLT cuts with no timetable could seize-up the market even more than it already is, at least in the short-term: some buyers may opt to hold-off on a purchase until rates are lowered… And they could be waiting for some time.
Looking ahead, Aston Chase declares itself to be "cautiously optimistic about the market. Whilst it’s still slightly more inconsistent and volatile than we'd like, the green shoots of recovery from the turn of the year are still pushing through. Given the way the market has performed over the past five or six years, it's certainly an improvement!"
Winkworth, meanwhile, is more on edge about the prospect of a General Election throwing yet more uncertainty into the mix.
Mark Pollack, Co-Founder and Director at Aston Chase:
"Boris Johnson's impending election as leader of the Conservative Party and move into Number Ten had already inspired and encouraged international and even domestic buyers to re-invest into the London property market. Fuelled by the knowledge that the UK now has a charismatic and driven leader who will, one way or the other, get the job done we predict this will only grow. Ultimately, this is what potential buyers and investors have been waiting for after an extended period of uncertainty and weak leadership. It looks like Boris has and will put the bounce back into the London property market".