London’s luxury property market needs a new sales pitch
The property market in London is facing a strange situation – while the industry trend indicates that the demand for housing is outstripping supply, prices are expected to shoot up further, the luxury homes market, on the contrary, is suffering from contraction, according to latest industry reports!
The outlook for the year 2016 is not impressive either, and now luxury property companies may have to reinvent their sales strategy if they have to maintain the growth momentum.
Homes costing above £5 million or above £7.6 million are the worst hit in the London market and the increase in their stamp duty are considered as one of the main reasons for the challenging situation. According to LonRes, an analyst of the London property market, the demand for luxury homes priced above £7.6 million fell by a whopping 60 percent during the third quarter of the current year when compared with the previous quarter.
It is forecasted that the anticipated decline in the sales of luxury homes are likely to impact the prices, but it may be a bit early to arrive at such a conclusion. The forecast of luxury homes segment for the years 2016 and 2017 is not satisfactory for specific localities in London. Savills estimates that the growth in prime central London in 2016 will be flat while it can increase by 2 percent in 2017 and 5 per cent in 2018.
There are also reports about a possible glut of homes priced above £5 million entering the London market, and they could pose a major challenge for the property companies. These findings necessarily need not ring the alarm bell for property companies, which are always reinventing themselves to overcome the hurdles for growth.
Though it is true that the new stamp duty will impact the sales of luxury homes in the long-term, there are multiple avenues for property companies to meet the demand for less-expensive homes (priced below £ 5 million). There are several localities beyond prime central London that offer value for money for property companies specializing in luxury homes, and maybe they need to be explored.
For now, the new stamp duty introduced last year gives buyers an impression that luxury homes are overvalued. However, that surely is not the case depending on the location and the price of the property. At present, other than the residents of London, there is a growing interest among Asians, particularly the Chinese and Indians, for luxury homes in London. Maybe a different sales strategy will help increase the investment into the London market from these countries.
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