London’s premier property market still reeling from Small Budgets
According to the latest data, the market for London’s most expensive homes has fallen into disarray and is unlikely to recover until next year after last month’s “mini”-Budget sparked expectations of a Real estate prices will plummet, according to the latest data.
The number of property transactions falling in the capital’s most expensive postcodes, which include areas of Mayfair and South Kensington, spiked in the five weeks following a statement from former prime minister Kwasi Kwarteng on September 23. , according to London’s senior surveillance specialist LonRes. real estate market.
Since the introduction of the “mini” -Budget, home sales of 262 units have declined, up 82% from the 144 units that fell during the same period last year.
According to LonRes data, the number of properties being cut to make a deal have increased by 60% and homes being pulled from the market are starting to increase.
“There’s been a pause in the market as a direct result of the ‘mini’-Budget, and which I suspect will lead to a drop in prices,” said Anthony Payne, chief executive officer of LonRes. LonRes executives said.
Kwarteng’s promise of £45 billion in tax cuts with few details on how they will be funded has caused a instant shock across the housing market. Borrowing costs skyrocketed as markets priced higher and faster interest rates rose, while gold-plated yields rose sharply.
That has taken a toll on the mainstream housing market, with lenders raising mortgage rates and product recalls for first-time buyers, while potential buyers drop prices because They think house prices will fall further.
The upper classes of the London housing market tend to be relatively isolated from these issues as many buyers are cash-rich and less dependent on borrowing. Overseas buyers also make up a large proportion so sterling weakness will often help.
But LonRes data shows that this time expectations for a sharp drop in prices are hitting sentiment. “What has disappeared is the desire [buy a home] overnight. It doesn’t matter if you spend £500,000 or £15 million, if you think the market is going to drop 10-15% then you wait. Why don’t you? ” Payne said.
Last week, Lloyds bank said it expected UK house prices to 8% off next year, and other analysts are even more bearish. Payne predicts the trading halt will last for at least six months, until prices fall far enough to lure buyers back.
Jo Eccles, founder of luxury real estate purchasing and management firm Eccord, agrees that the mood for the usual cash-rich buyers has dropped rapidly. With expectations of breakdowns on the rise, “people are embarrassed to tell friends at dinner parties that ‘I’m pushing for a purchase’. . . The affection is very, very delicate,” she said.
She added that higher mortgage rates also have a dampening effect. “There are many people who sit on the sidelines or have to redo their numbers and find that they have to spend a lot less than they used to,” she said.