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UK Property Market Update: Overseas Buyers Flock to London Ahead of Election

UKPropertyMarket

In the lead-up to the upcoming UK general election, the London property market is experiencing a surge in interest from overseas buyers. There has been approximately a 30% rise in such clients recently. The driving force behind this trend is the potential for the Labour party to win the election and subsequently raise the stamp duty by 1%.

Concurrently, many potential domestic buyers are adopting a wait-and-see approach, opting to hold off on their purchasing decisions until the election results are known. This has provided a boost to the high-end short-term rental market, as those hesitant to commit to a long-term property investment seek temporary accommodations.

Regardless of the election outcome, the main political parties in the UK have all pledged to address the housing shortage in London and improve the efficiency of the residential development planning system. This is undoubtedly a positive step for the overall health of the London property market.

Looking at the broader UK property landscape, the market is showing signs of recovery, returning to pre-pandemic levels. Listings have increased by 12-14% year-on-year, while agreed sales have risen by 12-13%, matching 2019 levels. The high-end market, particularly for 4-5 bedroom homes, is leading the charge, with properties coming to the market and agreed sales up by 18% and 20%, respectively.

However, the market dynamics vary across different regions. The hottest markets are in Sheffield, Manchester, Bristol, and Stockport, where over 70% of properties in the most popular postcodes are under offer. In contrast, London, Liverpool, and Yarmouth have seen more subdued activity, with some central London postcodes having no more than 16% of properties under offer.

The impact of high house prices, mortgage costs, and the rising cost of living has led nearly half (49%) of prospective first-time buyers to delay their plans over the past year. To counter this, 55% of first-time buyers are willing to relocate within the country to find more affordable housing options.

As the UK’s inflation rate has dropped to 2% in May, achieving the government’s target for the first time, the Bank of England (BoE) is facing pressure from estate agents to cut interest rates. However, the BoE is expected to be cautious, waiting for more sustained evidence of inflation control before considering a potential rate cut from 5.25% to 5%. The upcoming general election also adds uncertainty to market conditions, with estate agents anticipating a surge in activity in the second half of the year as delayed transactions are completed, but also concerns about landlords selling and exiting the market early due to the potential impact of a new government.

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