It seems like everyone’s talking about property at the moment. A tumultuous few months in British politics has pushed property high up the agenda. Runaway inflation of 11.1% has forced the Bank of England to raise interest rates to 3% and further rises are expected. The fight to take the heat out of the economy is now in full flow, but higher rates mean higher borrowing costs and the property market is creaking. All the signs point to period of painful correction.
But what about prime property? Higher end buyers tend to favour cash over debt. Sellers are less vulnerable to distressed sales. And events in rival international locations tend to have a strong bearing on the market’s desirability. The more prestigious end of the market usually dances to its own tune.
Richard and Sophie Rogerson of RFR are leading experts in high value residential property and recently published a detailed assessment of the market. London & Capital sat down with them to discover five of the key trends defining UK prime property as we head towards 2023.
Prime buyers love a bargain too
Prime property buyers tend to be generally less uptight when it comes to price. A good quality property is worth paying for after all. A traditionally tight property stock means good opportunities must be taken when they arise. But the economic turmoil means buyers are spotting that there may be good value in the market through additional supply or increasing leverage in negotiations. Whether or not either of these things transpires is uncertain, but the questions are being asked.
The dollar is king
The strength of the US dollar has put those with exposure to the currency in an advantageous position when it comes to the purchase of UK property. This naturally includes US citizens but also foreign buyers in jurisdictions with a dollar peg. Hong Kong and Macau both have a dollar peg along with several countries in the oil-rich Middle East. Those that earn a large amount of their income in dollars, such as tycoons in the shipping industry and commodities suppliers, are also in a beneficial position when it comes to UK property.
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London still a haven for foreign buyers
The UK may have gone through some political trials of late, but foreign buyers still see the country as a desirable location with the stability necessary for investment in prime property. A welcoming environment for foreign buyers always proves attractive and they are unperturbed by the recent messy political scene. Benefits such as a convenient time zone, excellent educational options for families and a cosmopolitan culture that is hard to replicate elsewhere all act as a magnet for foreign buyers looking to buy their own piece of London.
Turnkey demand and the flight to quality
The Covid-19 pandemic affected everyone equally. People in a variety of countries were confined to their homes and whether their properties were prime or not, many enthusiastically refurbished. But now most lockdowns have been lifted, the enthusiasm for turnkey properties has surged. Some prime buyers are now looking to purchase property that requires as little maintenance as possible and the UK offers a good variety of options. The clamour for convenience forms part of a wider ‘flight to quality’ amongst prime buyers.
Timing isn’t everything in prime
Timing in buying and selling property has suddenly become crucial for large parts of the UK property market. Prices and borrowing costs have become uncertain and people are asking themselves when they should act. For those in the prime property space, however, a focus on quality and a long-term outlook are more important. The economic headwinds that are blowing through the market tend to be less strong at the top end and this is likely to be reflected in any activity going forward.
The UK property market is facing fundamental changes at the moment and while the prime section of the market has its own dynamics, it is important to stay ahead of the curve. Understanding the market and its nuances will ensure that you are in the best position possible to achieve your aims.
At London & Capital, we know property is a central part of wealth management and our advisers are on hand to connect you with experts that can assist you with your needs.