LONDON’S property market is approaching all time highs as international investors shrug off Brexit fears to snap up both commercial and residential real estate.
Sales in London’s commercial property sector are to top £20 billion in 2017, putting the capital on track for a record breaking year.
Property adviser Savills says foreign investors are flocking into the British capital, with commercial property sales hitting £14.4billion in the first three quarters of the year.
The broker says buyers came from over 27 countries, contradicting predictions of a mass exodus of foreign investors from the UK property market following the Brexit vote.
Stephen Down, executive director at Savills, said: “UK real estate continues to appeal to a broad spectrum of international investors, while there is also demand from a broad professional investor base so long as properties are priced correctly.”
The strong growth in international investment could mean 2017 sales potentially beat a 2014 high of £21.4bn.
Meanwhile, figures from London Central Portfolio released today show that residential property prices in the capital are also on the rise again.
Following a brief period of decline, LCP reports that price growth in the mainstream prime residential sector (sub £1.2 million) is up 5.6 per cent on a year ago.
This has brought average prices in this band to £822,812. This is 15.6 per cent higher than three years ago, when stamp duty was changed from a ‘slab’ system to a graduated one which reduced charges on the lower end of the market.
However, a number of experts feel this didn’t go far enough, with economic think tank the Adam Smith Institute this morning calling on Chancellor Philip Hammond to scrap stamp duty altogether.
Policy advisers at the institute say stamp duty is “gumming up the housing market’ and keeping pensioners in houses that are too big for them. It estimated that the housing market would grow by £10bn if the Chancellor axes the tax in next month’s budget.
As well as growth in the mainstream property sector, more surprising were rising prices in ‘prime’ Central London property, which LCP says are up seven per cent over the past year and just 3.3 per cent below 2014 highs.
This follows a steep decline in the second quarter of last year when the government introduced extra taxes on the most expensive homes.
Commenting on the upward trend, Naomi Heaton, CEO of LCP, said: “We now see signs of recovery as buyers absorb the additional cost of investing into a world class, safe haven asset class.
“Brexit jitters also appear to be calming down as global political and economic uncertainty makes the UK an attractive place to invest in once more.”
Contrary to the Adam Smith Institute, however, Heaton called on the Chancellor to keep his nose out of the property market next month.
She warned: “There may be further volatility to come, particularly with the Autumn Budget on November 22.
“However, the Chancellor should take heed of the delicate position of the market which has recorded a 10.3 per cent decrease in Stamp Duty tax take, according to HMRC’s latest report. More tax meddling may tip the scales back in the other direction.”