Samir Salya on the latest price drop for London’s luxury real estate

There has been a 7% slump in the luxury housing market for the UK’s capital, thanks to high stamp duty and the uncertainty cast by Brexit. However, there are signs that the market is bottoming out and better times could like ahead.

Average cost down

According to real estate experts Knight Frank, the average cost of a luxury home in the prime area of London fell by 6.4% in figures leading up to March 2017.

The bad news has been contrasted with the fact that quarterly growth climbed to 0.1% in the first quarter of 2017, when compared with the three months prior. This is the highest level of growth since May 2016, and could be a sign that the slump is over.

Optimistic trends

Head of London residential research at Knight Frank, Tom Bill, said: “Trends in price growth in central London are pointing towards an end to the falls we saw in 2016.”

The stablisation began in Q4 2016, and was driven by sellers absorbing stamp duty costs into their asking prices. Foreign buyers and investors have also continued to benefit from the weak pound caused by the Brexit vote in June 2016.

Sterling is currently at an almost all-time low, meaning foreign investors will still be able to benefit while the UK’s economy struggles.

Luxury deals up

The total number of high end real estate deals (more than £20 million/US$24.95 million was last beaten in Q4 2014. Knight Frank predicts that house prices will stay flat in 2017, although it also took into account the uncertainty of the wider political background.

Formal Brexit negotiations are currently underway and the results of these are unknown to just about everyone for now.

Demand for super-prime robust

Knight Frank also analysed the rental market in London. Results show that the demand for super-prime lettings (this refers to properties costing more than £5,000 per week) is still high. Twice as many deals above this threshold were completed in Q1 2017, when compared with the same period in 2016.

This could be, at least in part, down to people choosing to rent instead of buying as they wait to see whether prices will fall further in the neighbourhoods of their choice.

About Samir Salya

Samir Salya is the Chairman of Reign Holdings, and is involved in UK and UAE real estate and construction. Samir holds over 20 years’ experience in executive management, business expansion, performance improvement, sales and marketing