Expect a lift for resi deals on greater confidence

COMMENT: For the UK residential property sector and central London market, December’s General Election result has been good news. A wealth of pent-up activity now has the confidence to move forward – delayed development projects, national and international investment, domestic buyers and vendors, all fuelled by greater certainty about the economic landscape, with new stock coming to the market. The reaction of the market has been swift and positive, with our London offices seeing a number of deals proceed and complete, in addition to increased levels of enquiries from buyers and vendors. We expect the market to continue to react positively, with slight price gains across the UK of 1-3% in 2020. Key areas of growth for the UK outside London will be the East and West Midlands, Yorkshire, the North and Wales. While the election result has delivered greater certainty and clarity, the key to this translating into increased volumes will be tempering and matching vendor and buyer expectations. Increased private and public spending will stimulate the economy, which may lead some vendors to expect a price “bounce”, but Brexit still needs to be delivered – a fact that may see some buyers expecting prices to remain soft. Despite domestic political uncertainty abating and economic uncertainty having been greatly reduced, the fullest picture will only become clear following a trade deal with the EU. Closing windows Prime central London prices will regain some lost ground and harden, with anticipated average growth of 1-2% for 2020. Some properties will see greater price increases, particularly those located in “hot spots” that are or will shortly benefit from infrastructure projects, such as Crossrail and urban regeneration of scale, and those properties that are finished to the highest specification in prime areas. Those include Marylebone, focused on and immediately around Marylebone Square (pictured below); Mayfair, focused on and around Hanover Square and Grosvenor Square; Belgravia, focused on East Belgravia; and areas along the Crossrail route. They will all see greater price increases than their immediate area average. [caption id="attachment_1013531" align="aligncenter" width="847"] Marylebone Square, London, W1[/caption] International buyers, who have benefited from currency fluctuations, are likely to see this advantage decrease, as the pound continues to strengthen. The possibility of further increases in stamp duty for international buyers provides a further impetus for UK property purchase not to be delayed. Once trade deals are agreed with the EU and other trading partners, the pound is likely to see further gains, closing the window through which international buyers have been able to take advantage of a weaker sterling. See-sawing sales The lettings market, which was busier in 2019 than 2018, has in the past experienced see-saw-like ups and downs, driven by sales activity rising and falling. Despite increasing sales activity in the coming months, lettings activity is unlikely to decline. Many clients electing to rent rather than buy property have specific reasons for doing so – work, family, principal property renovations, the increasing trend to “try before you buy” and preferred properties not being on the market. There will be some who have deferred buying due to political uncertainty, but equally the prevailing stamp duty land tax regime and total cost of purchase leads buyers to proceed only when they have found the right property at the right price. The removal of both political uncertainty and the possibility of an extreme socialist Corbyn government is good news for the UK and the UK property sector, allowing confidence to return for national and international investors and home owners. Coupled with low inflation and interest rates at record lows, UK property is once more a highly attractive prospect. Gary Hersham is founder of Beauchamp Estates