Sentiment is becoming a bigger driver of demand than Stamp Duty in prime central London (PCL), Knight Frank claims.
The agent said one third of PCL areas reported growth in prices last month, although values are still 9% below their last market peak in August 2015.
In prime outer London, prices are 6% below their 2016 peak.
Tom Bill, head of residential research for Knight Frank, said the level of these declines suggests both markets are bottoming out and have adjusted for the 2014 and 2016 Stamp Duty increases.
Instead, he said, sentiment has become a bigger driver, such as the impact of Brexit talks and stability of the UK Government.
Knight Frank said markets had become more idiosyncratic, with Notting Hill seeing the highest annual price rise in June at 2.1%
Bill said: “Sentiment has become a more important driver of demand, which makes the future direction of the market less predictable.
“Buyers are scrutinising the market for value but sales volumes and pricing data continued to show a broad bottoming out pattern in the second quarter of the year.
“One factor that is weighing on pricing is an uptick in supply, which is creeping higher as more landlords attempt to sell due to recent tax changes. It remains to be seen whether some vendors will revert back to the lettings market if pricing expectations are not met.”
Meanwhile, in prime lettings, Knight Frank said landlords were keeping their options open, with some still considering selling up due to the tax burden.
Bill said: “Sentiment has become a more important driver of demand, which makes the future direction of the market less predictable.
“Buyers are scrutinising the market for value but sales volumes and pricing data continued to show a broad bottoming out pattern in the second quarter of the year.
“One factor that is weighing on pricing is an uptick in supply, which is creeping higher as more landlords attempt to sell due to recent tax changes. It remains to be seen whether some vendors will revert back to the lettings market if pricing expectations are not met.”
Meanwhile, in prime lettings, Knight Frank said annual rental growth was positive at 0.8% in June for the first time in more than two years.
Statement summary, the market is all over the place and we have no idea what’s happening or where it’s going. However by fully utilising the use of management consultancy gobbledygook we can make it sound like we do.
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Just by inventing the phrase,” Sentiment has become the driver……” and repeating it several times in a very short article – nearly half of which is an accidental duplicate of the first part – it doesn’t mean that anyone understands what it means, let alone agree that it’s true. Gobbledygook indeed!
Perhaps the issue of Leasehold Reform is having an impact too?
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