The prime central London property market is still adjusting to the tax regime introduced more than three years ago but sales are expected to increase in 2018, the latest analysis shows.
However, economic and political uncertainty is also continuing to affect the market, according to the report from real estate firm JLL. It expects some long time owners to put their properties on the market over the next 12 to 18 months.
This will mark the start of a new, more active and acceptance phase for the sales market which is being encouraged by the fact that house prices increased by 0.3% in the first quarter of 2018, particularly two and three bedroom houses.
The report also reveals that the market in Mayfair, Chelsea and South Kensington has been firmer than elsewhere in central London.
When it comes to the lettings market, the report says that it is beginning to stabilise following three years of rental value falls. Demand was stronger in the first three months of 2018 but transaction levels remain low.
The report says that the new build lettings sector remains strong. Lower and mid-priced properties have been letting more quickly and at firmer prices, but the house market remains more challenging.
‘The new build lettings market has been particularly strong in recent quarters, with many renters happy to pay a slightly higher rent for the benefits of living in a new apartment with all the latest technology and facilities,’ the report points out.
‘Positive rental growth was recorded in Mayfair, Knightsbridge and South Kensington. ‘We expect the market to continue its realignment for the remainder of the year,’ the report adds.
For the remainder of 2018, JLL is forecasting that sales will increase slightly with rental values broadly stable or down marginally. The smaller-end of the market is forecast to be more robust.
‘We expect transaction levels to increase slightly over the course of 2018. Longer term pricing is expect to nudge upwards with stable growth of 8.7% by 2022,’ it adds.