Sealed bids make a ‘surprise return’ amid ‘fragile’ marketplace

Competitive and sealed bids have made a surprise return to the property market, says Savills.

The agent said a lack of stock in prime London markets meant 16% of its deals in the second quarter this year went to competitive bidding, with  56% of these resulting in sealed bids.

Lucian Cook, head of residential research at Savills, said: “Across the prime London markets as a whole, we’ve seen the surprise return of competitive bidding and even a few sealed bids.

“This results from relatively low stock levels and buyer commitment to securing the very best properties in a fragile marketplace.”

But while this is helping to underpin transactions, it is not leading to price inflation due to the political uncertainty.

Values in prime London areas fell by 1.8% in the second quarter, Savills said, less than half the level seen last year.

Pricing of prime properties outside of London fared better, falling by 0.4% annually but rising 0.3% on a quarterly basis.

Price growth was flat in prime London over the quarter.

Cook said the prospect of Stamp Duty cuts if Boris Johnson becomes Prime Minister could be a cause for optimism but questioned whether it was worth sellers waiting for this and risking the fallout from a potential no-deal Brexit.

He said: “There are a number of indicators for sellers to be more optimistic. But we face heightened uncertainty over what a new prime minister will mean for Brexit, the economy and, critically, tax policy, which suggests the prime markets will remain price sensitive across the remainder of 2019.

“We have already seen Stamp Duty reform raised by Johnson and his supporters. While it remains to be seen whether a compelling case can be made for cuts at the top end of the market from a tax revenue perspective, such a move now seems more likely than it did under the previous administration.

“Sellers who hold out for a Stamp Duty cut to oil the market will need to weigh this against the risk of further disruption to the market that could result from a no-deal Brexit or the possibility of a higher tax environment in the event of a change of Government.”

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