There are a lot of reasons for anyone involved in the UK’s regional premium markets to feel very smug at the moment. Despite all the fears of impending doom, these markets have continued to go from strength to strength, and the future looks as bright as ever.
It’s important to understand how much better premium markets perform compared with the mid-market. On a national basis, the mid-market has seen average annual growth of around 3.2% per year over the last decade. The top 5% most expensive properties, on the other hand, have seen much stronger growth, at about 4%. For the top 1%, the increase is even stronger still at approximately 4.8% per year.
You might, quite rightly, wonder why this is. After all, it is the same property market. So why do more expensive properties grow in value faster than mid-market properties? The answer is to do with the nature of market economies. The primary drivers of premium markets are high-net-worth individuals who determine the strength and shape of demand for such homes. The spending power of these people, and therefore their purchasing clout, increase at a faster rate than mid-market purchasers, which means prices of premium properties rise faster.
Read the full London housing market report.
But are there any dangers ahead? We do not think there is anything immediately on the horizon which should cause concern. Brexit seems to be causing volatility in specific liquid markets like equities and currencies, but the housing market is of a lumbering beast and one which doesn’t scare easily. It seems increasingly likely that there will not be anything too tumultuous in this political cycle, which means the only danger of some damaging ‘event’ lies afterwards.
If we were to go in search of dangers, we might look to the next UK general election, that will probably take place in 2022. It goes without saying that we are politically neutral, but I do not think it is unreasonable to say that, as things stand in Spring 2018, it doesn’t look like any party is a dead-cert to form the next government. Add to this the possibility that both parties might have to promise something ‘radical’ to win; it is possible that the next election could usher in a very different environment for those involved in the UK’s premium markets. Still, we think it is more likely that both parties will converge on the centre-ground of British politics, which would mitigate the threat to the premium markets and those who operate in them.
The outlook for our markets is so overwhelmingly positive that we have to reach further and further into the future to find potential dangers. With the market cool, but about to warm up with the weather, now is the time for anyone considering a sale or purchase in the premium market to get cracking.
Read the full London housing market report.
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