The RICS index shows most believe London home prices are falling
UK property demand fell to an 18-month low in November, but the Autumn Statement Stamp Duty reforms could boost the market by up to 5% in future, according to the latest RICS market index
UK real estate demand has fallen to an 18-month low, but the new Stamp Duty reforms are set to boost future sales by up to 5%, say industry professionals.
Estate agents expect a sales boost of between 2% and 5% from Chancellor George Osborne’s Stamp Duty reforms announced in last week’s Autumn Statement, which mean the tax will be based on the actual value of the property, rather than strict bands.
However, they fear the benefit will have less of an effect on the London market, where 40% more of those surveyed in November believed prices were falling than rising, says the RICS UK Residential Market Survey.
Simon Rubinsohn, RICS Chief Economist, says, “The Stamp Duty reform could reverse the softer trend in buyer enquiries that has been visible in recent months, but a critical issue in terms of how it plays out with prices is whether it also encourages more vendors to consider putting their properties back onto the market.
“The expectation from members that transactions could increase by up to 5% over the next year on the back of this measure suggests that there is a belief that supply will indeed respond to the tax change. This is all the more important given that the latest RICS data suggests that the average level of inventory on surveyors’ books is close to a historic low.”
Jeremy Blackburn, Head of Policy at RICS, adds, “It’s no surprise that surveyors are expecting an uplift in the market in response to the long overdue reforms to the stamp duty tax system which the Chancellor himself called ‘the most damaging tax of all.’
“Removing the ‘dead zones’ will reduce the distortion in the market and ensure that those at the top end of the market will now contribute fairly, while those at the bottom will be given a fairer chance to get on the ladder.”
Yesterday, OPP reported how changes to UK Stamp Duty have all but wiped out real estate investment demand for properties from £1.5million-£2million, according to top London agency, Henry & James.
In November’s RICS UK Residential Market Survey, house price growth fell to its slowest pace since May 2013 (a 13% net balance), the number of houses for sale per branch fell back to its second lowest reading of 56 and 15% more surveyors reported a decline in new buyer enquiries.
Uncertainly surrounding the outcome of the forthcoming General Election is providing potential purchasers with a reason to delay purchasing and new buyer enquiries have now declined for five consecutive months.
Across the UK, price growth was strongest in Scotland and the South West (both a net balance of 37%) and weakest in the North of England and London.
Meanwhile, in the rental market, tenant demand was steady in November, but landlord instructions declined for the eighth successive month and member’ forecasts for rent over the next 12 months now stand at 2%.
* In London, plans have been submitted by The Qatar royal family to convert three prime properties in Regent’s Park into a huge mansion, set to become the UK’s first £200million home.
Andrew Ellinas, Director of London estate agency, Sandfords, says there is still strong demand from overseas buyers for prime properties in Regent’s Park.
“Regent’s Park is a cosmopolitan area that offers a very diverse selection of beautiful properties making it a popular location choice for overseas buyers, working professionals and families.
“There is a lot of open space with both Regent’s Park and Hyde Park being just a stone’s throw away, as well as the amenities of nearby Marylebone including the hottest eatery, the Chiltern Firehouse, plus it’s now going to be home to the new royal palace, which will be the most valuable residential property in London in private hands, establishing the area as London’s hotspot for 2015.”
Demand for prime property in the area is likely to receive a further boost from new palace, particularly from Middle Eastern investors, he believes.
“At the top end of the market in Regent’s Park activity levels have in fact been very strong, despite the news surrounding the proposed mansion tax and the implemented increase in stamp duty for properties over £1.5 million.
“We have just exchanged on a beautiful Nash Terrace property in Kent Terrace for £5 million and an apartment in Cumberland Terrace for just under £3.5 million. I anticipate that demand in Regent’s Park will increase following this latest development and we will also see additional interest from the Middle East.”
Central London agent, Sandfords, has operated in Regent’s Park since 1994.
By Adrian Bishop, Editor, OPP Connect