The UK property market faces continued pressure as economic indicators weaken and uncertainty weighs on transaction volumes, according to analysis from Glentree Estates.
Trevor Abrahmsohn, CEO of the London-based estate agency, notes that key economic metrics including growth, productivity, business confidence and youth employment are declining, creating what he describes as a ‘feel-bad factor’ affecting market sentiment alongside concerns about persistent inflation and higher interest rates.
Transaction volumes decline
The upper end of the market has experienced the most significant impact, with transaction volumes thinning considerably. Values in parts of the prime central London market have adjusted by 20% to 25%, while properties in the £1 million to £3 million bracket have softened by approximately 10%.
Despite these adjustments, the anticipated surge in distressed selling has not occurred. Abrahmsohn states that the market remains illiquid but well supported, with many vendors under little pressure to sell and stock remaining constrained, placing a floor beneath current values.
Policy changes identified
Abrahmsohn identifies two policy areas that could influence market recovery. Stamp Duty Land Tax, reformed in 2014 under then-Chancellor George Osborne, is cited as restricting transaction flow and suppressing mobility across the market.
The removal of non-domicile tax status has also affected the upper tiers of the London market, with an estimated 16,000 people leaving the UK. Abrahmsohn suggests a flat annual levy of £250,000 could attract international buyers back to the market.
Regional outlook
North West London is positioned to benefit from any market recovery, according to the analysis, due to its location beyond the traditional prime property core while remaining within reach of global demand.
Recent activity in the £5 million to £10 million bracket has exceeded expectations given current market conditions, with the core domestic market continuing to operate in what Abrahmsohn describes as ‘an orderly fashion’.
Sterling’s relative weakness combined with price adjustments in prime London is beginning to make assets appear more competitive on a global basis, though market recovery remains dependent on policy changes and improved economic sentiment.
