London Property Finder

Summer Market Update

London Property Finder

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]

Is now a good time to buy in London

2020 Property Predictions

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. 

Perrygate is not a financial advisor and anyone considering purchasing UK property must undertake their own due diligence. The opinions expressed in this and other articles are the personal opinions of staff at Perrygate and are not investment advice. The value of an investment may go up or down. Please see our Terms of Use  for more information.