As a highly regarded Central London estate agent with clients in London and across the globe, movers and investors are naturally turning to Kay & Co for post BREXIT analysis and advice.
Here Martin Bikhit, Managing Director of Kay & Co, answers the most commonly asked post-EU referendum questions.
Q. If interest rates fall in the future, therefore reducing mortgage rates; will this positively stimulate the London property market?
A. Obviously, if interest rates are cut in the coming months, thereby making it easier to gain finance for a property, then we will see more people looking to buy.
It is likely that any interest rate cut would be married with incentives for first-time buyers, which would help to bolster the lower end of the market, which would then consequently support the rest of the market.
Q. Is supply still out of kilter with demand, leading to more buyers than properties available?
A. There is currently a small surplus of supply. We must remember, however, that as prices fall (which is a fairly certain event in the wake of BREXIT), demand tends to well up to meet supply. We are barely a few weeks on from the ‘out’ vote and many buyers are still uneasy; this will improve as time goes on.
Q. With any major BREXIT move not due for 2 years, would you say it's the 'status quo' until 2018, i.e. fluid movement between buyers and sellers?
A. To an extent, this will be the case. As it stands, Britain is still a full member of the European Union and will continue to be for at least two years. However, as we saw in the first six months of this year, uncertainty has a dampening effect on the market overall and I think that this will unfortunately continue to stymie transactions until we have assurances of the UK's future relationship with the European Union and any new trade agreements with other nations are cemented.
Q. Will London become more attractive to non EU businesses and buyers?
A. The fluctuating pound Sterling has meant that property in London has been an extra 10-15% cheaper than it was pre-vote. Since the referendum, we have experienced an increase in the number of Middle Eastern and Indian clients seeking homes in the £10m to £25 million range - many had begun their searches prior to BREXIT and were waiting for the outcome before proceeding. Fortunately, thanks to the currency advantage, this has more than countered any concerns associated with the result of the outcome and we secured sales of three prime apartments valued between £5 million and £15 million since the value of sterling fell. The purchasers felt the effective currency discount mitigated the cost increases caused by the stamp duty rise.
Q. Do you think the appointment of Theresa May as Prime Minister will trigger an emergency Budget with new perks for the housing market or a withdrawal of some of the buy-to-let landlord penalties?
A. Of course, Theresa May should review economic policy and look to support the housing market, however, we must also remember that the recent rise in stamp duty was the policy of the current government, not simply David Cameron. Stamp duty changes, not BREXIT, have been the single biggest cause of the dampening of the London property market.
If you have more questions about the current and future London property market, please contact Kay & Co for advice. Having worked through a number of different economic conditions for over 30 years, we are well placed to advise and guide.