Property market comment
As we enter the last quarter of 2013, the market for prime London property remains robust. All this year demand has significantly exceeded supply. Overseas buyers in particular, continue to seek a safe haven for their investments. In prime London property they can find it, along with an enviable lifestyle and undeniable prestige.
Despite the UK’s high stamp duty rates and hardening tax regime, London remains a very attractive destination for potential buyers. This may be supported by the fact that as a currency, Sterling continues to be seen as fairly weak.
At London Property Search, we have found that 60% of our clients who have secured prime London property this year have come from overseas, and other property market experts are observing a similar trend. Not surprisingly, investors from abroad are being credited with sustaining and even boosting the market.
Interestingly, across the London property market as a whole, reasons for buying have also changed. Now the primary reason for a property purchase is parents buying for their children (36%). Second homes amount to 32% of purchases, with buying a main residence (18%) and buying an investment property to let (14%) at the lower end.
Assessments of the status of the property market often focus on ‘achieved values’ – the prices for which properties actually sell. In the prime Central London market, there has been an estimated 69% increase over the last five years.
The number of transactions is also highly significant. Comparing the current situation against the bottom of the market in 2008, the number of property transactions taking place in our sector of the marketplace is up by nearly 40% over the same period.
This has been strongly reflected in the demand for our services, which is greater than at any time since the company was founded in 1995. However, we are sticking by our policy of taking on no more than four clients at any one time, and never taking on two searches with similar criteria simultaneously.
We believe that this is the only way we can absolutely assure our clients of a very high level of personal, tailored service with no risk of any conflicts of interest.
A number of property experts are predicting that more properties are likely to come onto the premium London property market this quarter, and this would be good news for buyers and investors alike.
The rising cost of Prime Central London homes is also fuelling growth in the surrounding areas. Now, existing residents tend to move to a much larger home slightly further out and at a similar price. Figures from agent John D. Wood show values in Primrose Hill up 40%, 36% in Battersea, and 20% in Wandsworth - especially for properties under the £2 million threshold for the 7% rate of stamp duty.
London Property Search works in all the capital’s most exclusive Central and surrounding areas, covering a swathe from Battersea and Fulham, through the Royal Borough of Kensington and Chelsea, into Westminster, up through Maida Vale, Primrose Hill, Belsize Park and Hampstead. During our 18 years in business we have developed a very high level of knowledge about all these areas and built excellent relationships with agents and other property market leaders.
Our experience ‘on the ground’ currently bears out the figures above, and confirms a ‘ripple effect’ in prices from Central London to the more exclusive neighbourhoods beyond.
House price bubble?
However, some concern has been voiced that property prices in London and the South East could be rising too fast. Fortunately most experts are convinced that the wealthy overseas buyers investing their money safely here, are the reason for the price rises. Mark Carney – Governor of the Bank of England, and Chancellor George Osborne, both reject the idea of a house price bubble. They point to levels of activity in the property market that remain below the peak observed before the financial crisis of 2008.
The Financial Policy Committee of the Bank of England recently stated that the UK’s housing recovery ‘appeared to have gained momentum and to be broadening.’ Nevertheless, their view was that it is under control, based on measures such as activity, debt costs and prices compared with incomes.
So, taking everything into account, we believe the Prime Central London housing market to be sustainable going forward, and that the fear of a ‘property market bubble’ is currently unfounded.
Our clients can rest assured that, whatever is happening in the Prime Central London housing market, we shall always advise them accordingly.
Sarah Van der Noot – Managing Director, London Property Search.
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