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coronavirus, luxury property news

How is London’s Prime Property Market Responding in the Midst of the Coronavirus?

11.05.20

Across the globe, we are all experiencing the effects of the rapid acceleration of the coronavirus outbreak.coronavirus, luxury property news

In the past few months, the property world has experienced a mixed wave of trends, from the broadly flat market of 2019 to post-election increased certainty and signs of recovery to a worldwide ‘hiatus’.

The country’s quarantine measures announced in March saw a rush in tenants securing high-end residential rentals as the lockdown became more stringent, and spending time at home became more important than ever before. Whilst property sales have naturally slumped, (70% according to some experts), some property firms are advising that the prime London market ‘is not dead’, as a small number of prime residential market transactions are still continuing to go ahead. This is reflected in a portfolio of luxury prime London homes, all carrying an asking price of circa £25m, which have been available and ready to view, albeit ‘virtually’, of course.

Virtual viewings are not a new idea and have been available for years. Sophisticated property technology has seen innovative advancements with 360 degree viewing, but until now these advancements were mainly made available for overseas clients. Virtual viewings are now available on many platforms as the industry adapts to the world of quarantining.

The relationship developed with the property agent is an absolute necessity, as viewers and potential buyers will need to trust their agent’s judgement when remote viewing is the only option. Many buyers will find this concept an unfamiliar one, but it will provide an opportunity to keep their interests alive and the cogs turning, albeit slowly.

Notably, due to travel restrictions globally, most international and UK-based buyers will naturally defer purchases (and are advised to do so where possible) until the Covid-19 freeze shows signs of thawing. In the short term, some experts are predicting that we are likely to see a surplus of properties becoming available once the lockdown is lifted, posing opportunities for buyers.

As to be expected in a global pandemic of this severity, there will be worldwide consequences brought about by the virus. According to news corporations and divorce spikes from China, we too could face a surge in uncoupling rates, resulting in increased stock on the market, due to quarantine measures. Media sources in Chinese cities such as Xian and Dazhou reported startling high numbers at the beginning of April, as the Chinese emerged from isolation. Perhaps absence does make the heart grow fonder after all.

But this is unlikely to have a notable effect on the prime residential market, which is more resilient and robust, than compared to the general market. In most cases the luxury market is the first to display recovery signals, following periods of downturn.

Some industry leaders are expecting there to be an influx of demand at the end of the year and early 2021 as the economies across the continents recover and recoup in the wake of the effects of the coronavirus. Part of this extrapolation lies in the hike of the 2% stamp duty tax in April 2021 for international homebuyers, as announced by Chancellor Rishi Sunak (All residential property purchased by international buyers will incur an additional 2% surcharge).

While long term the changes will most likely impact London’s international high-end market, it will create incentives for buyers to purchase before the new tax legislation is rolled out. We are expecting to see supply and demand increase across prime London, with overseas buyers helping to kickstart ‘post corona’.

These are exceptional circumstances and buyers or sellers looking to enter the property market are advised to do their homework at this time, making necessary contact with agents whilst still remaining cautious. The landscape will have naturally changed but adaptation in all forms will be key to progress.

Whilst many buyers and sellers will feel ‘on hold’ until after lockdown, vendors in a position to defer until later in the year are advised to do so, or letting on a short hold tenancy agreement, which is still expected to see a competitive environment once lockdown measures are eased.

In the current environment, it’s not yet clear how we are going to bounce back but we will get through this, inevitably. It will just take time to revive and restore.

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