Property Market Is Booming In London, What Are The Highlights?
Real estate market is experiencing more than a boom in London. Experts say that the demand seems to be reaching new heights after a little slowdown last year. The urgency for good properties lessened last year and the levels reached an all time low. However, as expected, the New Year starts with a promising trend and in spite of a tight situation on the lending side, buyers feel that it is the right time for buying and selling good properties. Since the interest rates are low, and a variety of choices are available, market is buzzing with buyers, sellers and estate agents. Who is buying today? Well, there is a huge assortment. There are young people, senior citizens, families, and bachelors. Everyone is in search of the best deal in the best possible rate.
The young ones
Young families desire extra space. Hence, three or four bedroom flats, villas or row houses are their preferred choice. They are cash rich and don’t bother much about pricing. High-quality homes are what they look for. Good properties that are in the calm and quiet areas with good conveyance facilities are liked by young couples. Properties near happening places like pubs, cafeterias and highly regarded restaurants get sold like a hot cake.
The moms and dads
Parents always look for properties where the kids can stay and pay installments for the mortgage loan instead of paying huge rents to landlords on a Buy-To-Let basis. They are interested in two or three bedroom accommodations generally. Of course, cost is an inhibiting factor here. Parents do not spend exorbitantly just for the sake of location. They are quite conservative in this regard. A futuristic approach prevails here, and they check for areas where there is a good potential for capital appreciation. They may retain the house after the kids move out; it should generate good rental income.
Professionals and salaried ones
Young professionals and salaried people make up almost two-third of the total buyers. They earn handsome salaries and buying property is just a mode of investment for them. A majority of them already have one property and look for a ‘second home where they spend vacation. A few people buy another property to give on a rental basis. Hence, they search for fancy properties with modern amenities and secure premises.
Why does London experience such a great demand?
People get amazed with the fact that the demand for owning good property in London continues to reach new heights, and the ratio of demand versus supply indicates a seller’s market. Various factors are responsible for making London the number one city for property investment. Why is it a safe haven for real estate crazy people?
- The city is close to Europe for travel. It remains unmoved with the financial crisis that affects the rest of the country.
- As the pound weakens against global currencies of the countries in the Middle East, South East Asia, Russia and the Far East, real estate investment in London is highly profitable.
- Lower rate of interests and a higher rate of properties attract a large number of national and international buyers.
- Financial experts reinforce with data points that London is a great place for multiplying money through properties. Statistics reveals the values have risen more than 10 percent in just one year. In a few areas, the rise is as high as 50 percent. It is a consistent trend, and that is the reason the market seems to be quite lucrative.
- In wholesome suburbs of London like Marylebone, number of properties sold every year increase phenomenally. Wealthy owners get overwhelmed with the magnificent architecture and picturesque outlook. They spend big money for the mansions and villas.
The changing trend
Financial experts say that the trend has changed drastically in last 10 years. Buyers have deep pockets today, but sellers are equally cautious. They market the property at lower rates initially and earn high price through bids. Since the buyers are more, there is always a competition. Even there are homeowners who have postponed the sale in anticipation of further high prices.
Traditionally, London properties attracted buyers with good paying capacity. However, recent trends show that a majority of them lend huge money for acquiring decent houses and villas. Even a large number of foreign investors also contribute in the market. Since their home countries face the financial crisis or political issues, London seems to be an affluent place that returns a good value for money in a long run. Prices per square foot increase as high as 400 percent making it an incomparable place for investment.
Is there any impact of the stamp duty change?
At last stamp duty threshold changed, and the new rules came into force in the month of December 2014. Surely, there will be a huge impact of the same on the property market. SDLT or Stamp Duty Land Tax is nothing but the tax liability when someone buys a property. Earlier there was a slab structure where the amount of tax was dependent on the price bracket. The percentage used to increase heavily with the movement of the slab with just 1 GBP. The percentage was chargeable on the whole amount and not on an incremental value. Since the hike was quite high when people crossed from one band to another, people used to keep the rates artificially low to save big money. It was unfair and undue.
Since the new arrangement looks at the incremental cost for tax calculation, it becomes fair and justified. Now people need to pay the incremental tax rate only for the amount that comes in the particular range. Thus, the calculation becomes justifiable and fair.
As tax rates become low, more buyers are looking for good quality properties in London. Newly implemented changes boost the market further and not only buyers and sellers, but everyone related to the real estate market expects a great time ahead. Year 2015 may surpass the earlier records and establish new ones.