Transactions across England and Wales in September dropped 7.6 per cent year on year while Prime Central London now sees fewer than 70 sales a week – and one investment guru puts it all down to the ongoing political and economy uncertainty gripping the country.
London Central Portfolio, a property investment consultancy, pulls no punches when it comes to saying where the blame lies for these figures, which are roughly the same as they were at the worst point in the global financial crisis of 2008 to 2013.
“Market sentiment has not been restored by the government’s policies or handling of the Brexit negotiations. In what is already a heavily taxed landscape the government believes there is still room to add further taxes directed at the overseas investor. This does not seem to be the right message for the government to be sending to the outside world with Brexit looming” claims Naomi Heaton, LCP’s chief executive.
“Undoubtedly it flies in the face of the ‘open for business’ slogan the Prime Minister previously used at the G20 summit in 2016” she adds.
“It’s hard to see how this decline in transactions can be reversed until there is an agreed outline plan for Brexit. International buyers, already affected by successive tax increases and now exposed to negative coverage of the current political situation, are holding back” she warns.
Nevertheless, she says the high value sector is seeing a better performance now than in some recent times, with the weakness of sterling and the high absolute levels of discounts encouraging homeowners, in particular, to enter the market.
“On the other hand, rental investors, who underpin the lower value end of the market are biding their time. It is likely that when sentiment improves, prices in this sector will harden quickly” Heaton believes.
She warns that there is little cause for optimism.
“Growth has been stifled by the government’s failure to give a clearer picture of what a post-Brexit landscape will entail for homeowners and investors alike. Those who have been sitting tight will have seen very little to encourage them to take the plunge in the current climate, particularly as the growth in the value of their own property has been nominal.”
By contrast estate agency chain Haart gives a very different view of the market claiming that prices have increased by nine per cent since the June 2016 EU Referendum and claiming the company is now recording transactions “at their highest for two years”.
“EU or no-EU the need to move home will always be there…Brits move for a whole host of reasons including good schools, new jobs and better transport links … Brexit is not a word our branches are hearing on the ground anymore, but instead, customers are much more focused on what is happening with interest rates and stamp duty, and for investors, the recent tax changes” claims Paul Smith, Haart’s chief executive.
Over the weekend a prominent London buying agent – Caroline Takla, managing partner of buying agency The Collection – called for a second EU referendum saying: “The Brexit negotiations are going extremely badly and we are hurtling towards a no deal, which would hinder the property market significantly.”