London Property Market 2019: SPRING UPDATE
Springtime usually means a busier property market as buyers and vendors come out of hiding. Despite a slow last 6 months, there is plenty of evidence of the market starting to move again with increased activity all round.
London Spring Market Data: Key Takeaways
- Central London recovery? – Inner London has fallen 2.7% over the last 12 months – mainly due to larger drops of around 10% in certain prime central London neighbourhoods, especially with properties over £2m. However there are signs the market may have bottomed out. Rightmove’s House Price Index recorded a 2.7% increase for inner London over the last month. Furthermore, a Knight Frank report found a 11.3% increase in newly registered buyers and 14% more offers are being made. Greater market interest is translating into more offers than in 2018.
- ‘Average Time to Sell’ falling. Whilst London still has some of the longest sale times in the UK it does appear to be dropping from its January peak. We believe vendors pricing homes more realistically is helping.
- Respite from Brexit uncertainty? The extension of the UK’s withdrawal from the EU till October may provide buyers and vendors with enough certainty to move. Some will see a chance to buy and sell within the same economic cycle over the next few months. Those moving to a more expensive property in London should be able to save more on their onward purchase than any discount on their own sale.
- SDLT still causing a drag on the market. According to the latest figures, SDLT tax receipts are down almost £1 billion compared to the previous year. It is a key factor behind the slower market but whether this will lead to a government rethink remains to be seen.
Perrygate’s General Market Observations
- Overpriced ground floor/basement flats. Many are still coming onto the market at unrealistic prices. Issues such as less privacy, increased noise or even security risks are often not factored into asking prices. This is usually due to vendors getting carried away or agents overvaluing a property to win a listing. A good starting point to get a better picture of the sale of a ground floor flat is to find out if the asking price has been set by the agent or vendor.
- Brand Beware. Buyers should proceed with caution when considering developments with expensive PR/marketing campaigns. Whether it is Television Centre (former BBC HQ), Battersea Tower Station or The Gasholders there has been a recent trend of developers trying to leverage existing brands to generate hype. We have written at length about issues with London’s off plan property market before. As always, a property’s fundamentals (location, room sizes, overall quality of the development etc.) should be the key indicator of value. After all, once the hype of an exciting new launch has died down, that’s what the buyer will be left with. One of our main roles as a buying agent is to look past the marketing blitz and coldly evaluate a property’s merits.
- Competitive UK mortgage market is good news for buyers. Borrowers continue to benefit from fierce competition between lenders and 5 year fixed rate mortgages are currently available through some lenders for as low as 1.79%. This means we are seeing an increase in buyers choosing to leverage even when they are in a position to put down cash for the full purchase amount. The Bank of England is once again suggesting that the base rate may increase from 0.75% in future so many see now as a good time to get locked in at low rates.
- Weak sterling presents opportunities. It is no secret that London is currently a buyer’s market but that goes doubly for overseas buyers. The drop in the value of sterling following the 2016 EU referendum has given international buyers greater buying power. Of course nobody knows if sterling will go up or down, but it is currently sitting close to its lowest point in more than twenty years against other major currencies.
Value of Sterling against major currencies: (SOURCE: GOOGLE - 5TH MAY, 2019)
- Help to Buy – caution required. Research from Really Moving suggests Help to Buy properties may be overvalued compared to the rest of the market. It certainly seems to have lined the pockets of major UK developers but provides questionable value to first-time buyers who can only use the scheme for new build purchases which are on average 14% more expensive. We feel many new builds would not justify their higher prices if they weren’t propped up by Help To Buy.
- Housing Stock more limited than it appears. Buyers looking on Rightmove should remember that the number of properties ‘For Sale’ is not a reflection of reality. Many ‘Under Offer’ properties are listed as ‘For Sale’ by agents for marketing/contingency purposes. Other properties are marketed by unmotivated vendors who are simply testing the water. As a buying agent one of our key responsibilities is identifying properties which can actually be purchased in a fairly quick timeframe.
Interested in buying a property in London or have any other questions about the market? Contact us today to discuss your search and for a no obligation consultation.