UK Property Values in 2017 -London property

What are homes in London and in other parts of Britain are worth as a result of uncertain economic times and politics? The total value of UK housing is now £6.79 trillion or 3.65 times the size of the overall economy. The private housing wealth is now over £5 trillion, the first time ever according to recent research by Savills. A £1.5 trillion increase in the overall number can be attributed to the growth in the London and South East property markets. Price growth in these markets is expected to decline over the next few years though.

London Prime

The average London mortgage is at £240,000 and has grown by 29% or £60,000 in cash terms. Also increasing is the number of property owners who have successfully paid off their mortgages, calculated in cash terms at £2.39 trillion. With life spans increasing, older home owners of 65 years of age and older now hold 43% of owner occupiers equity or £1.5 trillion. The report states that private landlords have seen their equity rise from £683 billion in the past five years to £1.2 trillion in 2016. Homeowners in the age bracket of 35 and under now account for £200 billion of net housing worth.

London prime property prices which had witnessed phenomenal price growth and returns is now seeing values in the most expensive boroughs of the city decrease by £9.6 billion with most of the decrease in suburban Barnet.

Thanks to its affordability and location, the South East area in 2016 was higher for the first time since 2004 for housing property values. One area, Slough, saw property values at its highest price valuations and not just for metro area London but for the entire country.

Stamp duty rates for higher value properties have been a ‘headwind’ for the prime market. Since 2014 the prime property market valuations have decreased -5.8% throughout London and in the most expensive city market, prime valuations are down -12.4% since 2014. The 3% duty on additional homes has also impacted ‘second-hand’ sales in the city. Almost £1billion was raised by the 3% surcharge in the second half of 2016.

For the second half of 2016 more realistic property prices has led to increased transaction volumes for London.

Private Rented Sector

The popularity and expansion of the buy-to-let sector has raised the values and is now worth £1.4 trillion. Investors in this sector are not only seeing new tax policies but also increased mortgage regulation making investors pay more to get into the market. Because of the 3% stamp duty, sales were down 11% for the first 11 months of 2016. In the last quarter of 2016 almost 63,000 purchasers paid almost £500 million in stamp duty to the Treasury. Research indicates that large scale investors without the need of buy-to-let financing along with some second-home buyers were moving the market.

The new build supply for private rental property is over 55,000 units in developments of 50 units and up. To date 1,330 are now completed, 8,469 are being built and 25,395 are in the planning stages. London accounts for 59% of the existing and future units.

The prime rental market for London and outer reaches has decreased this past year -5.1%, and -0.9% respectively. The drop is attributed to high levels of available units and a drop off by corporate demand as a result of the uncertainty of Brexit.

Potential investors and tenants are more value-oriented than ever as they seek properties both local and outside the city opportunities. This has also lead to pressure on prices for the prime market as uncertainty lingers over the future.

Savills concludes: ‘In London we are forecasting for rents to fall slightly further and capital values to remain broadly flat over 2017, before both markets pick up again in 2019 when our position over leaving the EU becomes clearer.

The Country markets however are expected to remain stable as the lower prices in these areas have not had the impact of the stamp duty thus allowing for growing popularity outside London for buyers and tenants.

By Kevin Murphy:

Property Newsletter
Register for our newsletters to receive details of our latest property promotions.


Please enter your comment!
Please enter your name here