Anticipated stamp duty and interest rate hikes could spur activity or caution among property buyers in London and neighboring counties to open 2011. Although foreign buyers are drawn to London’s prime real estate, the market remains polarized between high-end and low-end properties, with realistic pricing the key factor. See the following article from Property Wire for more on this.
The real estate market in London and the Home Counties could see a Spring revival as foreign buyers are still showing a lot of interest, it is claimed.
But the top end of the country house market is likely to struggle as it is generally overpriced at present and in general properties that are correctly prices will sell in 2011, experts believe.
Speculation that interest rates will rise could boost the market, according to Andrew Giller, partner and head of The Buying Solution’s London office. ‘We anticipate an active early spring market as international buyers are still very prominent at the top end of the Prime London market, and the signs are that confidence is returning to the City,’ he said.
‘We may see an increase in transactions during the first quarter of 2011 due to a stamp duty increase to 5% on properties above £1 million which comes into force in April 2011. There is likely to be increased speculation that interest rates will start to rise, encouraging buyers to consider competitive mortgage arrangements sooner rather than later,’ he explained.
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‘On the other hand, it may be that VAT increases and talk of interest rate rises could mean that those who are not in a rush to purchase will hold off whilst they wait to see what the market does,’ he added.
The Home Counties of Berkshire, Buckinghamshire, Surrey, South Oxfordshire, and West Sussex, is seeing a lot of interest from Russian, Chinese and Indian buyers, according to Paul Frost, the company’s associate partner for the area.
‘Much like this year, we’ll see the greatest activity in the spring, largely driven by city bonuses, but also related to a continuing shortage of quality houses. We anticipate a continuation of the two tier market that we’ve seen this year, with the best properties generally being offered privately. These will still perform strongly with prices continuing to rise,’ Frost said.
‘The wider market, conversely, is likely to remain flat whilst there is still some uncertainty in the economy. We hope that the gulf between buyer and seller expectations, which has opened during the course of this year, will begin to close again,’ he added.
A two tier market has also opened up in Somerset, Wiltshire, West Berkshire, Hampshire, and Dorset, according to Bobby Hall, partner and head of the Southern region. ‘Good properties that were priced correctly have sold well, whereas blighted homes or properties that were overpriced didn’t achieve their guide. We have also seen activity at the top end of our market, with a number of private sales,’ he explained.
‘I anticipate that this scenario will continue through much of 2011. If interest rate speculation grows, we may well see an increase in supply, particularly at the lower end of the market which will be more directly affected by interest rate rises, perhaps leading to downward pressure on prices,’ Hall added.
In Gloucestershire, Oxfordshire, Warwickshire, Northants, Herefordshire, and Worcestershire properties that are priced correctly will sell well, believes Ran Morgan, partner and head of the Central region. ‘We think it is unlikely that stamp duty changes will affect the market unduly, but a combination of this and other factors, might just bring a little more caution to those who have planned a move in 2011,’ he said.
But the top end country house market, properties costing £10 million plus, is likely to experience a fairly difficult year, the company believes. There is currently more on the market than usual, albeit privately available, and in many cases over priced, despite there being less demand. The exception will be best in class properties and top end trophy homes which will still attract buyers where correctly priced, particularly in the Home Counties, where it is a more internationally driven market.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.