The UK general election result in June has so far failed to deliver a bounce to the prime property market, bucking the trend of the previous five parliamentary polls, new research has found.
Price growth in the London prime market has collapsed by 7% since June and the market is entering unchartered waters, according to the analysis from buying agents Garrington Property Finders.
It points out that prime property sales in England and Wales rose by an average of 26% after the previous five general elections but the Hung Parliament has failed to deliver this time.
The lack of a boost has been most acute in London, where the annual change in prime property prices per square foot fell by 7.1% last month, falling from a 3.3% increase in May to a 3.8% decrease in June.
Transactions are down too, with the number of prime properties sold in the capital during June slipping by 15.8% compared to May, the analysis report also shows.
While June data for the rest of England and Wales has yet to be published, the report points out that London’s prime market is widely regarded as a bell-weather for the UK’s prime market as a whole.
It suggests that if the trends are replicated elsewhere it will prove a dramatic reversal of the traditional post-election bounce seen by Britain’s prime property market. The prime market has consistently outpaced the mainstream market which saw an average post-election boost in transactions of 17% in an unbroken run stretching right back to Tony Blair’s first victory in 1997.
Nevertheless, the prime market, defined as the most expensive 10% of properties sold in a region in a year, began 2017 strongly. In the first six months of the year, average prime prices rose by 4%, helping it overtake the mainstream market for the first time since the introduction of higher stamp duty on more expensive homes in 2014.
‘The prime market tends to be the most sensitive to political and economic uncertainty, and the current dose of both is clearly having a cooling effect, especially in London. Britain hasn’t had a minority government since 1974, so the fragility of the new government’s mandate and ongoing concerns over Brexit are pushing the market into uncharted waters,’ said Jonathan Hopper, managing director Garrington Property Finders.
‘Yet for astute buyers there are opportunities. Prime prices in London have softened considerably in the wake of the 2014 stamp duty increase and last year’s Brexit referendum. In that time we’ve seen a steady stream of buyers secure substantial discounts as anxious sellers adjust their expectations in return for the certainty of a sale,’ he pointed out.
‘Where London leads other regions tend to follow, and as the post-election fizzle spreads out from the capital, the next few months will provide some strong buying opportunities for prime buyers across the country,’ he added.
Source: Property Wire