This quarter we have invited Liam Bailey, Global Head of Residential Research at Knight Frank, to comment on the disparity between the Yorkshire and London markets. Liam has substantial experience across the UK and international residential sectors, is a leading authority on the residential market and is widely quoted in the national and international media.
House prices in central London have risen by 75% since the aftermath of the financial crisis, and now stand 30% above their pre-crash peak in early 2008. Predictions that this property wealth would be felt across the UK's prime country markets, as Londoners took the opportunity to cash in, have been made regularly in recent years; but weak regional economic growth and employment prospects conspired to slow the process. The North Yorkshire market has fallen by 7% during the same period.
Ironically, just as the so-called "ripple-effect" was moving market growth away from the south-east corner of the UK, the Chancellor raised Stamp Duty rates for anyone buying property above £1.1m in late 2014. While much of North Yorkshire's prime market transacts at or just below this level, the impact on London and the South East has been to see higher-value sales volumes falling by 20%.
The net effect of this change, together with the newly announced 3% "additional Stamp Duty" for second homes and investment properties has been to moderate transaction activity across UK prime markets - but in most cases the issue is with properties which are overpriced.
Our data confirms that over the past 12 months, properties which sold at their original asking price sold within five weeks, whereas those that were sold at a discount of in excess of 10% of asking price took three times longer to sell. With a strong economic underpinning, 2016 should see an improvement in trading conditions. The importance of correct pricing at the outset remains critical to achieving sales.