After 20 years of uninterrupted growth, the London real estate market is stabilizing. It even seems that, for the first time in more than 20 years, prices have fallen, of the order of 5 to 10% in certain districts. So, is it still worth buying an apartment in London?
Who knew that Brexit would be voted? Not many people let alone the Conservative government in place that, a few months ago, had decided to put in place some measures to slow down the real estate market. The first was to change the structure of the stamp duty by reducing it on “cheap” goods and increasing it sharply on premium goods with the direct consequence of lower prices on premium apartments. family houses in central London. In addition, the Stamp Duty was increased by 3% for any purchase of a secondary real estate or rental property, curbing the ardor of investors. This additional tax, intended to encourage the purchase of first-time buyers, has also had a perverse effect. Instead of buying apartments worth two million pounds, investors sometimes preferred to buy four properties at £ 500,000, to be less taxed. The price of small apartments has therefore been little impacted, bad news for those who wish to access the property.
Buying for rent
Buying for rent might be less interesting than before. Nevertheless, investing in the British capital still offers many advantages. London will always remain London, an attractive and safe city for investors. Uncertainty related to Europe’s exit and negotiations will certainly slow down the development of new programs, resulting in a reduction in the supply of available products and thus increasing the already abysmal deficit of housing with possibly future price increases. .
The evidence, Savills, a key real estate player on the spot, known for its cautious forecasts, predicts a growth of 5% within four years.
It is also interesting to note that, despite the “negative” reforms taken in a pre-Brexit real estate market context that was considered too dynamic, despite the Brexit uncertainties, real estate prices in London have not collapsed. At worst, they decreased slightly, up to a high of 10% in some neighborhoods (compared with an average value increase of 10% per year for 20 years). They may therefore recover faster than expected (if, as the latest figures in the economy seem to confirm at the time of writing this article, economic indicators are good) and that the period is so conducive to doing great business. Would we be in a market tough?
With the weakness of the pound, it could also be a good time to buy for those with savings in euros or dollars
It can be very interesting for those who own a property or apartment in France or elsewhere, to borrow with this property as collateral to get out of cash to invest in London. This has the dual benefit of benefiting from a very interesting exchange rate at this time (1.10% instead of 1.45% in March 2016) and long-term fixed interest rates in France (15 to 25 years) instead of two to five years maximum in the UK.