According to a survey by Enness Global, over two-in-five (41.5%) property investors have lost confidence and certainty in the London property market over the last 12 months.
The fall in confidence is even more profound within overseas investors (53.1%) and high-net-worth individuals earning more than £200,000 (56.8%). The majority (51%) of all survey respondents said the biggest cause of uncertainty on London’s prime property as part of investment strategies is the new UK government’s policy and regulation.
Islay Robinson, CEO of Enness Global Group, described the figures from the study as “surprising”, adding that it reinforces the need for clear action to retain the English capital’s stature as an attractive asset for global investors.
The Autumn Budget looms large
Robinson has pointed to the 2024 Autumn Budget as a huge opportunity for the new Labour government to reveal policies designed to encourage greater investment in the London property market and, in turn, underpin the wider British economy. Robinson described London property as the “jewel in the UK’s crown”, insisting that it can “shine” worldwide as before, providing the right policies are implemented.
Of those surveyed who have lost confidence in London’s property market, they cited interest rates that could be higher for longer as a primary cause for concern. They also alluded to an increased reluctance from mortgage lenders to approve new loans.
These challenges do represent opportunities for property buyers in London though. If mortgage rates stay higher for longer and the necessary policies to encourage fresh investment in London assets don’t transpire, this could depress the London property market, exerting downward pressure on property values. Sellers may soon struggle to get what they consider a ‘fair’ price for their assets in the capital.
Rising mortgage rates can also put pressure on some London property owners who may now be struggling to afford the mortgage that’s potentially increased by 50% or more in the last couple of years. In this scenario, more asset owners may look to ‘sell my house fast’ services, connecting with cash buyers to dispose of their properties before the threat of repossession.
Reasons for investors to be positive in London assets
On the other side of the coin, the most positive respondents to Enness Global’s survey said they believed the UK economy to be one of the most stable in the G7. They also cited the continued imbalance between demand and supply for housing in the country as one of the main reasons for its property to remain a strong investment opportunity.
The clear message cutting through from the study is that the policy-led, regulatory environment from the UK government still has a major sway on investor confidence in property, not just in London but nationwide. Robinson said it was “unsurprising” that so many investors had the handbrake on due to the lack of clarity surrounding reported policy changes.
Robinson added that the general mood felt “extremely downbeat”, even after the first Labour Conference since the party regained power in July. He mentioned the potential changes to tax rates surrounding inheritance tax and capital gains tax as potentially damaging “already waning confidence”, which could have “unintended consequences”. Robinson fears that the new UK government may be taking London’s appeal and strength for granted.
