IS London A BUYER'S MARKET?
We are asked on a weekly basis if London is currently a buyer’s market. The short answer is yes but the situation is not straight-forward.
Although our clients do have significant negotiation leverage, identifying the right property is a significant challenge in a quieter market where future buyers and sellers are content to wait on the sidelines. With a Brexit extension secured and campaigning underway for a December general election, we don’t expect the available housing stock in London to increase significantly until early 2020 when there should be more political certainty.
For London to be a buyer’s market in the strictest sense there would have to be more motivated vendors and not just fewer rival buyers. The most recent example was in the aftermath of the 2007-2008 financial crisis. Prices were down 20% in some postcodes, mortgage defaults spiked and some people had real concerns that the financial markets would not stop falling.
The situation today is very different. Low interest rates, tighter lending criteria and modest price declines mean far fewer distressed sellers. The percentage of London home owners without a mortgage has also steadily increased over the last decade.
Buyers also need to remember that properties listed For Sale in central London include homes:
- already Under Offer but still listed as For Sale for marketing purposes.
- with fundamental issues not disclosed by the vendor/agent and often not apparent at a first viewing. This could be Japanese knotweed, a short lease or a troublesome doubling ground rent clause. As always, hiring a quality surveyor and solicitor is paramount.
- vendors not engaging with reality and expecting 2016 prices. Estate agents keen to win business are often guilty of misleading vendors about an achievable sale price.
- with owners only testing the market and with no clear plan for their next move. There are properties on the market right now where offering the asking price (or even more!) will cause the seller to panic and prepare for an awkward conversation with their selling agent.
What’s left are a limited number of properties with genuinely motivated vendors, uncomplicated chains and no major skeletons in the cupboard. Put simply, our job is to find them and then secure the best price for our clients.
Of course motivated vendors always exist and we have had particular recent success matching our clients with vendors upsizing. As they are typically achieving a sizeable discount on their own purchase, they are willing to accept a significant price cut on their own sale. In addition, we are active in London’s off market listings where genuine and discreet sellers are on the look out for serious and well organised buyers. Off plan developers keeping an eye on cashflow are also offering significant discounts to our clients.
So is London a buyer’s market? Yes but only if you can find the right seller and property.