The recent slowdown in housing market activity in and around Fulham is unsurprising given the persistent lack of housing supply and ongoing political and economic uncertainty, caused by the looming Brexit negotiations, as well as Theresa May’s decision to call a snap general election in April which has produced no overall winner.
The Prime Minister’s gamble on an election backfired spectacularly, as we ended up with a hung Parliament, which has unleashed considerable forces of uncertainty in the housing market – both locally and nationally.
As we enter yet another period of instability and uncertainty, some would-be purchasers are likely to hold off from buying property until the election dust clears. However, there is still a strong appetite for property – but purchasers remain price sensitive.
Thankfully, many committed sellers are starting to understand the need to factor in political and economic uncertainty, as well as higher stamp duty costs, into their price expectations in order to attract cautious purchasers, and it is a strategy that appears to be working, as reflected by what has been a rather impressive uptick in the number of sales agreed at Brik in recent weeks.
Despite the need to be somewhat flexible with pricing in order to absorb the stamp duty increases that came into force in April last year, it is unlikely that values will fall much further, given that the declines in prime central London pricing over the last 12 months or so now correlate very closely with the rate of stamp duty increase.
In fact, with the number of homes coming onto the market falling significantly below the level needed to meet demand, the number of prospective buyers continues to dramatically outweigh the volume of properties available, which in turn is expected to place upward pressure on home values moving forward.
Although the housing market in London has been flatlining for a while now, the latest survey from the Royal Institution of Chartered Surveyors (RICS) shows that the overwhelming majority of its members expect home prices to rise by an average of 3.5% a year over the next five years, primarily as a result of the growing supply-demand imbalance in the housing market.
Ultimately it is worth noting that big events like elections typically do unsettle markets, and yet, in the end, the housing and the wider economy tends to remain resilient, as was the case after the Brexit vote 12 months ago.
Despite potentially weaker sentiment amongst buyers, mindful of the far-reaching political, economic and social ramifications that the election result may pose for the UK, any possible downturn in our domestic economy will eventually recover, as will the housing market, as the core fundamentals remain the same, including the UK’s strong bedrock desire for homeownership.
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