There are signs that London is struggling to pull out of the political uncertainty caused by the Brexit process, and that this continues to have a notable impact on the capital’s property market. While £51.5bn worth of property has been traded in the capital over the last year, Knight Frank reports that the number of new listings over that time period has fallen by 21.7% - and that is likely to have a larger impact down the line.
Transaction levels fell in January, February and June, and Tom Bill, head of London residential at Knight Frank, puts the blame squarely on the political uncertainty, saying: “The new prime minister has pledged to boost the UK economy, which should drive activity in property markets, all else being equal. Anticipating any short term impact on pricing from a stamp duty cut, as proposed by Boris Johnson, is less straightforward given the potentially distortive effect on supply and demand. However, such a move would reduce trading frictions and should therefore raise transactions and tax revenues in the long term.”
This is in contrast to many other areas of the country which have successfully pulled away from the political uncertainty and are growing strongly. This means that UK buy to let property investors would be wise to continue ignoring London and focus on investing in the regional markets which have proven themselves resilient during these tougher times.
A good example of how strongly the markets are performing outside the capital can be seen in the latest Rental Price Tracker from Rightmove. Of all the regions in the UK, only Greater London saw a quarterly fall in rents, and the average gain everywhere else was as high as 2.7% in just three months.
Not coincidentally, two of the areas which showed particularly strong growth – the North West and Yorkshire – are home to big regional cities which are a magnet for businesses and young professional renters. The likes of Manchester and Sheffield are booming and defying the London doldrums.
This buoyancy is reflected in the latest UK Cities House Price Index for June 2019. The average UK city house price inflation is recorded at 1.7%, but Manchester (4.9%) and Sheffield (3.5%) are both trending far higher. Likewise, both cities are displaying strong annual growth which is far in excess of the national average.
It is becoming increasingly clear that buy to let property investors should continue to move away from London. The capital is showing signs that the political upheaval caused by Brexit is affecting it an abnormal amount and, in comparison, regions such as the North West and Yorkshire are proving to be much more resilient.