2009 has been a particularly difficult year for Central London property. The market bottomed out in February/March and during these months the few transactions that happened where at the lowest levels. However, the market began to pick up as we moved into the spring months largely due to overseas investors buying up London property. In some cases the combination of the weak pound and lower capital values created savings for buyers of between 40% and 50% on what an identical property would have cost 12 months ago.
At the same time we also experienced a surge of “upsizers” keen to exploit lower prices. This sector of the market decided it was time to sell their apartment £1,000,000 for 10% or 15% less but to save 10% or 15% on a much more expensive £2,500,000 house, leaving them with a net gain.
As we moved through the summer it was apparent that stock levels were gradually being depleted with not much sign of more stock coming on. Would be sellers held off from putting their own properties on the market due to them being unable to find a suitable property to move to. Sellers of second homes or investment properties (a big source of property supply in W1 and W2) have been reticent to sell due to interest rates being at an all time low and a lack of any meaningful alternative to do with the sales proceeds.
This dwindling pool of stock combined with pent up demand resulted in the return of gazumping and sealed bids situations with examples of some properties selling at hundreds of thousands of pounds over and above their asking prices. This phenomenon, however, was restricted to the very best homes in the very best locations.
As we move into 2010 the market is likely to remain buoyant. With interest rate increases still a possibility and with mortgage with lending likely to ease further, it is probable that buyers will have both a greater choice of properties and more purchasing power. This combination, however, is most likely to mean that prices will remain stable for the next 12 to 18 months with modest increases after that.
Brisk start 2010 but not everything in sight is selling
January 18th, 2010 by Martin BikhitDespite the arctic weather conditions 2010 seems to have got off to a reasonable start. We’ve had a flurry of valuation requests, no less than sixteen in the first week which is probably about as many as I valued in the last three months of 2009! How many of these will ultimately come to the market remains to be seen but early indications would suggest that the general sentiment is that sellers are feeling that now might be the time to move.
The lack of supply continues to be the single biggest factor dominating the market and even if every one of the sixteen valuations comes to the market I fear that it will not even begin to dent current demand that we are receiving. That said, there remains a two-tier market in place and sellers should be aware of this. Buyers are selective, true prime properties, those on the best floors and in the very best roads will continue to sell at prices equivalent to (or in some cases in excess of) 2007 levels, while those that for whatever reason are not deemed to be as prime will still sell but not at the same levels as they would have at the peak. Some agents appear to be unaware of this fact and about a third of the valuations that were carried out by us were of properties already on the market with other agents. In virtually every case it was blindingly obvious that the sole reason a sale had not taken place before the end of 2009 (and the last three months of 2009 were very strong) was that the agent had over estimated the value.
As is inevitable in a market that has pent up demand but a lack of supply, agents have started giving would be sellers over inflated valuations in order to entice vendors to sell and to sell with them. So be warned, the market is good but not everything in sight is selling at the prices being quoted by agents. But that’s still a massive improvement on this time last year and we remain cautiously optimistic for the coming year.
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