20 Oct 20.10.2017 Property Digest – Autumn 2017
20.10.2017 Property Digest – Autumn 2017
The growth of London’s luxury-home market has been sluggish, and this can be depicted by the actuality that sales of apartments and houses in the capital’s best locations rose by a mere 0.5%. Different stakeholders in this industry such as estate agents were left disappointed because they expected a tremendous growth after the pound slumped because of Brexit. The ideology depicted is that with a weakened pound more foreign investments were expected because it was cheaper for such investors to enter the London’s luxury-home market. Specifically, a similar trend had been previously witnessed because after the financial crisis happened the pound declined. This is the reason why falling values were observed, and this was advantageous to the Asian investors as they had been presented with massive discounts when buying London’s best homes. Evidently, many stakeholders in this sector had based their speculation on this inclination, and this is the reason why they expected a significant growth after the pound fell because of Brexit.
This was, however, not the situation because most of the prospective buyers comprising of upper-middle-class residents of Singapore and Hong Kong had already acquired a property in the UK capital. The ideology depicted is that demand was low and this is the reason why a surplus was experienced. London’s luxury-home market, therefore, became less attractive and this can be demonstrated by the actuality that its value fell by 15% since its peak in September 2014. The perception demonstrated by this trend entails the actuality that buyers from Hong Kong were at an advantage as they could purchase a mansion in London’s best locations for 30% below the normal rate. Evidently, prime central London properties have experienced diminishing demands because of declining rents and rising taxes for second-home owners and landlords. Many investors have, therefore, been deterred from investing in London’s luxury home market because of sluggish growth instigated by these attributes.