London Property PREDICTIONS 2020
2019 was as a year of political and economic uncertainty causing low transactions and limited housing stock. Are we in for more of the same in 2020?
Perrygate is not expecting dramatic changes this year but we are looking forward to a busier market than 2019 with more buyers and sellers taking action.
Here are some of our key predictions for buying property in central London in 2020.
Less political uncertainty means a modest increase in housing stock.
Throughout 2019, many of our clients feared a Corbyn government even more than a potential hard Brexit. Proposed hard-left policies including seizing 10% of publicly listed companies and forcing private landlords to sell to tenants understandably caused concern. The Conservative’s overwhelming December election victory has prevented this worst case scenario and provides the certainty that they are set to govern until at least 2025. For many international buyers already benefiting from favourable exchange rates, this election result was enough to complete on purchases or start searches this year with an eye to quickly exchange contracts.
Of course the election result is just one factor to unlocking the slow market. Brexit is a far more complex process which will continue to cause uncertainty throughout 2020 – but hopefully to a lesser extent than last year. Although the UK is set to leave the EU by the end of this month, we expect many domestic buyers and vendors to remain on the sidelines whilst the post-Brexit economy takes shape.
On balance, we would be very surprised if the Spring market is not significantly busier than 12 months earlier. Stable low-interest rates combined combined with current wage growth will see more buyers come out of hiding.
Best-in-class properties to continue to sell quickly. Organisation is key.
The top 10% of any property type (whether that be a Kensington mews or a 1 bed flat in Notting Hill) are not staying on the market for long – if they are reasonably priced inline with recent sold prices (not asking prices!). Competing bids at this end of the market are still common and giving the estate agent/vendor the security of working with a serious buyer can make all the difference. On several occasions in 2019, our retained clients secured a property partly because they were well-organised and financing/surveyor/solicitor were in place before an offer was made.
In a quieter market, off market has a key role.
Whilst we expect the market to pick-up this year we are still expecting lower than average transaction figures. This means off market listings will remain important for buyers – particularly for purchases above £2m in prime central London. Prime vendors do not want the time their property is taking to sell and every price reduction detailed on Rightmove. There will be more vendors leaving details behind estate agent desks looking to be matched with discreet, organised buyers.
Off plan and new builds present opportunities.
We have previously covered issues with London’s off plan market but feel there are now opportunities. Towards the end of 2019, we negotiated discounts on off plan property in central areas up to 15% – delivering a very competitive price per square foot. Many developers have quarterly financial targets and cashflow pressures so there are opportunities to secure a fair price. Due diligence in off plan is vitally important, especially where there are limited direct comparables and high service charges have to be factored into the overall value. Many off plan listings are still wildly overpriced however. We were recently quoted £5m for a fairly uninspiring 3 bedroom flat in one development which we would have struggled to value at half that amount. Some developers are still trying to market such schemes to overseas buyers and take advantage of a lack of local knowledge.
Looming tax changes for international buyers.
The upcoming Conservative budget may bring a further stamp duty tax for non-UK tax resident buyers. The policy was announced in November but there is only limited detail at this stage. If this policy comes into effect later this year it is unclear what impact it will have on London’s prime housing market where international buyers are very active. We are working with some buyers looking to achieve quick exchanges before this potential tax change plays out.
At a time where buyer ands seller expectations are often very different, a buying agent can play a key role representing their client and helping them achieve a fair price for the right property and crucially, getting a sale over the line.
If you are planning to buy a property in London in 2020 and would like to discuss your search with us? Please get in touch.