Summer 2021 Market UpdatE
Landmark Month for Perrygate
Perrygate recently had its best month since opening in 2018. In the space of 30 days, we transacted on just shy of £6m of prime London property with significant savings achieved on all purchases. While these are no doubt modest numbers compared to larger buying agents, it felt like a milestone for our small family business. We are delighted with how clients are responding to our approach and the results we are achieving for them in a complex marketplace.
It is always a privilege to be entrusted to oversee what is typically one of the most important purchases in someone’s life. To better reflect our ethos to “treat each purchase as if it were our own”, this year we reduced the number of clients we work with at any time from six to four. In the coming years, Perrygate will remain a boutique firm with a first-class network to deliver the best service possible for a small handful of clients.
The London Market – Contrasting Fortunes
It’s no secret that the UK property market is experiencing a boom. Nationwide recently reported annual house price growth at 13.4% – the highest level in seventeen years.
In London, however, the picture is less clear with average house price growth at 5% and significantly lower in Prime Central London – around 0.3%. The lack of international buyers is being felt keenly in central London, especially for £1m+ one and two bedroom flats. Our searches for smaller central flats have been notably less frantic than for family homes in ‘London Villages’ such as Dulwich and Hampstead. When international buyers, students, domestic workers and tourists return to London, we expect to see the performance gap between central flats and family homes start to narrow. Several clients are taking the same view and are looking to take advantage of a quiet market to acquire compact but very well located London homes.
Relative Underperformance of London Flats vs Terraced Houses (Source: Land Registry
The Stamp Duty Holiday in Context
Many have attributed UK house price growth to government stimulus via the Stamp Duty tax break. The SDLT Holiday has clearly boosted sentiment nationwide but we would argue its partial end will not have a huge impact on the market.
Knight Frank reported eleven countries, including the US and Canada, outperformed the UK last year. It is fair to infer that while the Stamp Duty Holiday has clearly had an impact, low interest rates and people reassessing their living situation during Covid are the key driving factors.
Property – The Ultimate Inflation Hedge?
There is increasing scrutiny of the Bank of England’s assessment that the current inflation spike is “temporary” and a small increase in interest rates may not stem the tide.
Historically, property has been an excellent hedge against inflation. Rents tend to increase in line with inflation and at a time of devaluing currencies, housing remains a tangible and limited commodity.
This year, we have worked with several clients wary of frothy equity markets and looking for a safe long-term haven for their capital. As a further hedge, some clients able to pay cash are opting to mortgage at low fixed rates. A prolonged inflationary period will erode the real value of the debt but of course figures should be stress-tested against a potential change of course from the BoE’s rate setting committee.
The Rise of Off Market but Buyer Beware
Hamptons International recently reported more off market transactions in the first quarter of 2021 for any period since 2007. It makes up a significant part of our business, especially at higher budget levels.
While there are exceptional off market properties, much like the open market, there is also a lot of poor stock. If you peak behind the curtain, you may sometimes be underwhelmed! From our experience the best off market listings come from vendors mindful of privacy and not those testing the market’s reaction to speculative asking prices.
Going the Extra Mile
Since starting the business, Lara and I have always prided ourselves on building long-term relationships with clients and being on hand well after completion. We frequently work with clients at no extra cost for months after our success fee has been paid.
In the last few months, Perrygate’s complimentary aftercare services have included:
– a two month process of organising design meetings, sourcing architect quotes and defining the scope for a full renovation of a family home in Hampstead.
– conducting a rental search under time pressure for clients who have successfully used our Buying Service.
– sourcing an interior designer for a large lateral flat a client purchased in South Kensington. Assisting with numerous other personal affairs for the same client.
– assisting an overseas client set-up their tax and financial affairs in the UK post-completion.
We hope our approach will allow us to build long-term relationships with our clients and continue to rely on word-of-mouth referrals for new business.
If you are looking to buy in London in 2021 or beyond or simply have any questions about the market, don’t hesitate to get in touch on +44 (0)208 0880 522 or [email protected].