As the final quarter for 2018 begins to end, what are the final results for prime residential property?
Coutts recently released their prime index with a comparison of the prime markets for London and Paris. The report indicates some signs of weakness especially for the London market with the government imposing a 1% stamp duty surcharge on non-resident buyers.
Sales for London have been declining with transactions showing a drop of -5.5% in the Q2 of 2018. Sales volumes have dropped by a third since 2013 with the prices of £1 million to £2 million having the largest market value declines.
The Coutts report states:
‘For those with a long-term view, high discounts and low competition amongst buyers mean this could be a great opportunity to buy prime property in the capital.’
Prices for London prime have declined for three straight quarters for 2018 to -0.8%. Compared to 2014 London prime prices have fallen on average 14.7%.
Areas for the lowest discount rates around London for family homes are Wimbledon, Richmond, Putney & Barnes and Hammersmith & Chiswick.
Discount rates remain high with rates for super prime properties valued at £10 million or more with reductions on average of -14.6%. The most notable for the high discount rate is South Kensington with discounts of -15.2% off original asking prices.
Property sales for Mayfair and St James’s have been the quickest at 134 days on average. The slowest market locations are Bayswater& Maida Vale with an average of 188 days on the market.
Top sales areas for £10 million plus prime properties were in Chelsea followed by Kensington, Notting Hill & Holland Park.
Mohammad Syed, Head of Asset Management at Coutts said:
“The end of Brexit uncertainty – when it arrives – is likely to release some pent-up demand and see a rise in market activity and prices. But we believe that it will be some time before transaction volumes return to the levels seen in 2013.”
Whilst London prime prices have dropped nearly 15% since the second quarter of 2014 the markets in Paris have seen an increase of 9.5%.
Prices for prime Paris have risen since 2016 thanks to domestic buyers and reached a four year high in the Q2 of 2018.
‘In a rising market, buyers generally have little negotiating power with sellers. This explains why the average discount secured by Parisian buyers is now three times lower than in London.’
Both cities have become popular for prime residential buyers as cultural and business centres have brought great opportunities for property investors.
‘Sharing a language with the economic powerhouse of the US, for example, favours London’s status as a centre of business, while the euro provides Paris with a trading advantage across the Eurozone.’
But will the conclusion of Brexit negotiations lead to a worker exodus?
Hakan Enver, Managing Director at professional service recruitment company Morgan McKinley Financial Services, says in the Coutts report:
“There is no doubt that ongoing negotiations around the future of Brexit are having an impact on employment in London. That said, the number of senior executive roles in London does not seem to have been affected. Regardless of how unclear things are, ensuring the right senior executives are hired will always be of the utmost importance.”
By Kevin Murphy: www.kevinmurphy.london