As we approach Halloween, Brexit is still very uncertain; stamp duty may change again, pessimism floats in the air…. And this mood permeates the London property market. The mood is ‘scary’.
As a result, many buyers still want to believe in everything the press writes and thus continue searching for their own ‘El Dorado’; in the property world that being ‘an amazing property in a top location at a great discount’. But we are afraid that such El Dorado continues to remain elusive.
While it is true that Brexit brings much uncertainty and continues the theme of overall price reductions from the heights of 2014, it is also true that the opportunities to purchase good quality properties at a strong discount are rare because there is very little in terms of distressed property.
And even when they surface (as seen this past 2 weeks in Mayfair), they get quickly snapped at a very attractive prices because competition is fierce. Treat!
Now before we move on to what is currently happening in the London property market, let me make clear that this article refers to Central London and Prime London only. Although the general feeling that the London property market is fragmented applies to the whole of it.
Since the beginning of the year we have seen shortage of quality stock, fierce competition for the best (aka ‘flight to quality’), a significant increase of off-market properties, diverse valuations and an increase in lead times. See this article published this week in Bloomberg: https://www.bloomberg.com/news/articles/2018-10-22/brexit-deal-or-no-deal-london-s-housing-slump-is-here-to-stay
Flight to Quality
As buying agents, our job is to source property or in these days, to hunt for property.
As the pool of available properties shrink given that people are not trading up unless they are divorcing, downsizing, dying or in desperate need to sell, more and more we need to dig deep into our connections to unearth good properties.
The current uncertainty has fuelled the ‘off-market’ property sector. In certain postcodes and certain budgets, the proportion of properties on the off market has significantly increased.
At the same time, the number of special situations has also increased. Again, these are not available to the general public.
When the average person complains that they cannot find anything good in the public portals, it is true to a certain extent. When you wonder where the good stock is, well, the answer is not on the open market.
Since the beginning of the year, we have witnessed an increased number of sales happening this way. They tend to be for the ‘best of the best’. And in these cases, competition can be fierce. We have recently been successfully involved in one buying situation where we had to fend a number of bids.
We are also witnessing clients understanding that ‘turn-key’ commands a premium. Many people don’t really have the time and inclination to deal with a refurbishment. And given that turn-key properties in a traditional building are a rarity these days, when they are good, they will command and achieve a premium. Another striking and very unique property that we were involved has just gone under offer for above asking price breaking the record for the street. This was no average turn-key but a beautifully finished product.
The same sentiment is also fuelling demand for high end developments in Mayfair, Marylebone and Belgravia, which are selling well and also breaking records. And even these, many of them are also not available on the open market.
The return of the British buyer
When it comes to property and to London, nobody knows better that their very own. Many British buyers are returning to buy property in prime postcodes as they are convinced that this is a good time to buy.
British buyers are behind the mini-booms seen in Notting Hill, St Johns Wood, Marylebone and even in new developments like Chelsea Barracks. In Notting hill prices have actually gone up beating the downward trend of the rest of London.
Of course, not everything in NH or Marylebone is selling. As you are all aware, the London property market comprises a variety of ‘micromarkets’ where every street is different. British buyers truly understand this.
For a property to sell in this market it has be in the right street (and even the correct side of the street); to be good (by most people’s standards) and more importantly the price has to accurately reflect the value of the property.
A client recently told us he wanted to get a good discount. He wanted ‘real value’. He is not alone. Most buyers out there, fuelled by the current uncertainties and the headlines, assume that they can go in and just get away with murder.
While discounts are certainly encouraged be aware of the reasons behind: has the property failed to attracted a buyer since listing?, was the asking price inflated to begin with? Is it due to many other similar properties being on the market? Or perhaps is a way to acknowledge that the quality is not what you think it is.
Asking prices remain ‘subjective’ and ‘arbitrary’: keen agents overstating prices to win mandates, unrealistic sellers, individual circumstances… they all play a part on a property not being fairly valued.
A good buying agent can help you navigate all those intricacies and arrive to the true market value of a property. And if needed, steer you away from making a costly mistake. True value should also be about buying the best you can buy at the best price.
As we approach the end of the year the London property market in general remains fragmented. It remains ‘all over the place’. But similar to the art market, the value of a property is in the eye of the beholder.
Property in general is subjective. And value nowadays is property specific. So do not underestimate the value somebody will put to a property. And at the same time, as a seller, listen to what the market is telling you.
More importantly, yes Brexit hangs there, together with the ghosts of taxes, but London is still a cosmopolitan city where many people want to live, work and educate their children.
Finally, amidst so much uncertainty, it makes more sense than ever to ask for a professional London property consultant for help and advice to buy London property and also to rent. So call us to help you go ‘trick or treat’.
If you need help in navigating the property market, please feel free to contact us for impartial advice on 020 81917508 or firstname.lastname@example.org