London’s Evening Standard newspaper is required reading for many of the city’s residents and commuters heading home and further afield. Its articles are, in general, unbiased and objective although it is always reminding its readers what a great city they live in. With the price of London property rapidly becoming a political issue due to many Londoners finding themselves priced out of the market, the paper has increased its coverage of the sector in recent times. An article that appeared on the 14th December will certainly have upset many of the agents that have been marketing to overseas buyers.
For most of this year there have been rumblings that the London property is looking very expensive. In recent months sales levels have fallen and prices have stagnated. Of course, most agents, particularly those holding exhibitions in Asia, are not inclined to broadcast this. Whilst the reality is that the price growth was being fueled by both domestic and international demand, once demand from overseas waned then price growth was bound to stall. The question many people are now asking is whether prices will fall.
The Evening Standard article was headed ‘Investors dump new flats back on market.‘ It comments that as many as 60,000 homes are expected to be completed in areas such as Nine Elms before the end of 2017. With over 50% of those believed to have been sold to offshore buyers there is certainly cause for concern. The increase in stamp duty, coming after the introduction of capital gains tax for offshore residents, has prompted many investors to step back from the market. Cluttons, a leading London agency, believe that up to 30,000 newly built apartments could be dumped on to the market as investors make a hasty retreat. This will, according to the paper and it is hard to disagree with it, inevitably lead to falling prices.
We are certainly not trying to denigrate the London market. We have been active in that market since 1994 and have had an office there since 1997. If you are looking for a medium to long term capital growth property there is no better market to invest in. However, I would not rush in and buy at the moment. The first quarter of 2016 will give us an indication of where the market is heading and by the middle of the year there may some good buying opportunities