According to the findings, the 2017 post-election paralysis has been most acute in London, where the annual change in Prime property prices per square foot fell by 7.1% last month – slumping from a 3.3% increase in May to a 3.8% decrease in June. Transactions are down too, with the number of Prime properties sold in the capital during June slipping by 15.8% compared to the May figure.
While June data for the rest of England and Wales has yet to be published, the capital’s Prime market is widely regarded as a bellwether for the UK’s Prime market as a whole. If the trends are replicated elsewhere it will prove a dramatic reversal of the traditional post-election bounce seen by Britain’s Prime property market.
Garrington’s analysis of official Land Registry data found that across England and Wales, sales of Prime property rose by an average of 26% in the two months following each of the past five general elections.
As the chart below shows, the Prime market has consistently outpaced the non-Prime market – which saw an average post-election boost in transactions of 17% – in an unbroken run stretching right back to Tony Blair’s first victory in 1997.
Nevertheless the Prime market – defined as the most expensive 10% of properties sold in a region in a year – began 2017 strongly. In the first six months of the year, average Prime prices rose by 4%, helping it overtake the non-Prime market for the first time since the introduction of higher Stamp Duty on more expensive homes at the tail end of 2014.
Jonathan Hopper, managing director of the buying agents Garrington Property Finders, comments: “This early snapshot of the post-election market confirms what many had feared – there has been no sudden relief rally.
The Prime market tends to be the most sensitive to political and economic uncertainty, and the current dose of both is clearly having a cooling effect, especially in London. Britain hasn’t had a minority government since 1974, so the fragility of the new government’s mandate and ongoing concerns over Brexit are pushing the market into uncharted waters.
Yet for astute buyers those uncharted waters can teem with opportunity. Prime prices in London have softened considerably in the wake of the 2014 Stamp Duty increase and last year’s Brexit referendum. In that time we’ve seen a steady stream of buyers secure substantial discounts as anxious sellers adjust their expectations in return for the certainty of a sale.
Where London leads other regions tend to follow, and as the post-election fizzle spreads out from the capital, the next few months will provide some strong buying opportunities for Prime buyers across the country.”
