According to global property advisor Knight Frank, sentiment is the key driver of activity in prime regional markets in the U.K.. Uncertainty surrounding the UK’s political landscape means discretionary buyers and sellers are cautious. Consequently, pricing has been subdued and stock levels are muted.
Prime regional values were virtually unchanged in the three months to the end of June 2019, up by 0.1%. On an annual basis, prices were 2.3% lower.
Knight Frank agents noted that despite the uncertainty there remains a market for well-priced stock. Buyers, however, are price sensitive and are increasingly knowledgeable about the market.
Though transactional activity is muted, there are increasing signs of pent-up demand, with the average number of new applicants registering per Knight Frank office at its highest level in five years in the second quarter, and the average number of viewings per office also at its highest level since 2014.
Given the more discretionary nature of prime markets outside of the capital, whether this translates into a pick-up in activity will remain largely dependent on the political and economic outlook, but it suggests that underlying demand is building should political clarity be forthcoming in the coming months.
However, as demand builds, analysis of listings data from Rightmove shows that stock levels are low.
The number of properties newly listed for sale so far in 2019 in England and Wales above £1m has fallen 18% compared with the same period last year and by 30% compared with the same period of 2016 (before the referendum), underlining the potentially advantageous position for active and new vendors whose properties are competitively priced should the current political uncertainty recede.
Knight Frank further reports the market for UK homes up to £1m has been less affected by political uncertainty, with values up by 2% since the referendum in June 2016.
Prices above £2m average prices are nearly 5% lower than they were at the time of the EU referendum and are still on average 20% below where they were at the previous market peak in early 2008.