The Perils Of Not Offering On That Property You Have Just Seen!

With uncertainty still in the air after the Brexit vote, the easiest thing to do when considering a property move is nothing! We at Kaye & Carey are concerned that stock levels could remain low this Autumn in the Prime Central London postcodes because of the following:

Low Interest Rates

With Interest rates having been reduced to a new historic low of 0.25% after more than 7 years at 0.5% owners are not under pressure to sell.  Indeed, in an uncertain period with property values at best stagnating, a vendor is likely to explore the option of letting a surplus property in anticipation of a price recovery two or three years hence.

Debt Free Owners

These potential vendors have no mortgage to service and with downward pressure on prices they are unwilling to sell for less than what they perceive to be the right price. The fact is that unless they have purchased within the last twelve months they will almost certainly have seen the value of their property rise so why give that away now?

Decrease in the value of Sterling

With Prime Central London having such a high percentage of non-British residents, the drop in Sterling’s value since the Brexit vote will have a significant bearing on anyone’s decision to sell. Sterling has dropped 18% since September 2015 so convert that to a potential sale price of £2,000,000 means that someone wishing to convert their sale into Dollars will receive almost $480,000 less!

High rates of Stamp Duty

The new SDLT thresholds were an attack on Prime Central London and the South-East in general. A leading national estate agent has forecast that prices in the area we cover will have only increased by 10.2% by 2020. This means that a buyer is unlikely to have recouped their SDLT costs until they have owned their property for 4 years!

Conversely, SDLT paid today by a buyer from overseas will be more or less covered by the decrease in Sterling’s value against the Dollar and Euro.

Therefore, taking all of the above into consideration, we think quality homes in PCL will be in short supply this Autumn and those properties that do become available (and are correctly priced) will be much sought after, particularly by overseas buyers.

So, if you see a flat or house you like, don’t dilly dally too long or it could well be gone!

Adam Carey, FNAEA, Director