The beginning of March officially heralds the arrival of Spring and despite recent temperatures and negative press headlines the property market is not in total meltdown.
In mid-February, we saw all over the press that a house in South Kensington (Park House) had taken a massive price cut and ‘only’ sold for £40m. What the headline (“total meltdown”) failed to mention is that this particular house (formerly owned by Mark Birley, Annabel’s founder) sold for around £4,000 per sq ft, which as you can see still is a really punchy number. But this does not make for the same headline….
We now have data from this past January which shows that 499 £1m+ sales were recorded by the Land Registry that month, up from 355 in December, with London contributing 307 (up from a paltry 180). Many of these sales were impressive and they share a common theme: location. They are all in prime locations in some of London most desirable postcodes.
Now, some of the headlines are right. Prices are softer from its peak. On average prices fell some 8% between the last peak in August 2015 and February 2017, but let’s not forget that this is still less than the 24% decline recorded between 2008 and 2009.
The Prime Central London (“PCL”) market has been softening since mid-2014 in the face of several factors: increased stamp duty, change to the non-domiciled status, higher annual taxes on properties held in corporate structures, toughening of mortgage rules and on ownership structures, removal of some inheritance tax shelters etc. And let’s not forget Brexit. Quite a package and probably there is more to come.
What trends are we seeing?
During the ‘hot market’, everything would sell. People were in a rush not to miss a property. On average, it would take any property in South Ken / Knightsbridge less than 20 viewings to get an offer. Usually these would take place within 2-3 weeks of the property being launched.
We also saw a lot of price distortion, a property in Fulham would be asking the same price as one in Chelsea. Prime Notting Hill was achieving the same or more than Belgravia. Properties that needed a lot of work were asking the same as those newly refurbished.
Now, in this market, there is real price differentiation. It is taking on average 40 viewings to achieve the same…. and this is now happening over 5/6 months. So if you are selling your house, be patient. And be realistic in price. Price is the key thing. There are many active buyers in the market that are keen to buy (at the right price).
Certain hotspots remain, and I am not talking about the usual top names (Eatons, Cadogans, Lennox, Victoria Road, Phillimores, etc) but areas like Brook Green are very ‘hot’ at the moment.
Another ‘side-effect’ is the resurgence of ‘off-market’ properties. We are seeing a significant amount of properties, specially ‘best-in-class’, being offered and sold on this basis as people do not want others to know about their property adventures.
But you may ask: why the optimism of recent months? Well, to start, accidental tenants are seeing their savings being eroded and are beginning to realise that Stamp Duty won’t change so are now prepared to take the plunge and buy. We have helped two such tenants in the last 3 months.
People are now aware that as long as they are focusing on a mid-to-long term view, the fundamental reasons for buying in London haven’t changed.
We are all witnessing a shift in property buyer’s motivation from one of investing in property for gain to one of investing in property for quality of life and an acceptance that the high costs of purchase can be spread over the period of ownership.
Fragmented market is to us what best defines the current market. It is impossible to generalize. However there is a cautious optimism amongst serious buyers that the future for London is bright.
If you are looking to make a move this year and would like objective advice on buying or selling, or perhaps you would simply like impartial advice on property, we would love to talk to you.
Address Property Consultants
Address Property Consultants are independent London Property Consultants specialised in Central London property. http://addresspropertyconsultants.com/
Contact me on 07789714013 or by email: firstname.lastname@example.org
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Sources: Lonres, The Telegraph, Primeresi, Youhome report, etc.
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