London prime property market report
As 2014 dawned most estate agents were like old Mother Hubbard and her proverbial cupboard – with their shelves virtually bare.
With the first quarter of the year behind us and spring upon us, whilst the cupboards are not quite so bare there continues to be a shortage of properties due to the continued confidence in the economy with more domestic, as well as international, buyers again throwing themselves confidently into the market. For prospective buyers this means a stressful, competitive property hunt and rising prices
The strength of the London housing market in 2013 exceeded most expectations. Indeed, many estate agents had to review their initial growth predictions halfway through the year – and many had to double them. Over the past 12 months prices have grown by between 7.5% and 17.1%, depending on the area and price bracket. Annual growth in London has continued to surge, averaging over 10% more during Q1 2014 than in the same period last year.
These price increases are creating a ripple-effect, with more locations becoming “prime” in the wake of super-prime location prices extending beyond some people’s reach. These, within easy striking distance of super-prime locations, include Battersea, Fulham and Islington.
A client who engaged our services towards the end of last year had spent the previous nine months trying, unsuccessfully, to purchase a property on his own. Each time he was either too late to follow up opportunities he spotted on property portals, or lost out during sealed bid processes.
On engaging our services he asked whether our negotiating skills would save him the fee he would pay us. We were very honest and said, no, whilst we couldn’t guarantee that in the current market he would, however, definitely save on the price he’d have to pay for a property in another nine months’ time if he kept trying unsuccessfully on his own.
With our support, in January he purchased a stunning three-bedroom, two-reception room lateral flat in prime SW3, for around £7m. Each month since we first made the offer, such property has continued to rise in price, which means our client has already seen capital growth on his flat, beyond the fee he paid us.
‘Off market’ rises
It is always tough trying to source and secure property without professional help – and with the highest ratio of buyers to sellers for many years, it is now harder than ever.
By tradition, it is usually properties priced at £10m plus that tend to be sold ‘off-market’. However now we are seeing more and more off-market sales on properties at well below that price. A recent client wished to purchase at the £2m level. Given our contacts, the three properties we showed were all off-market. Fortunately we secured them the perfect home from amongst them.
Where to now?
So, as many are asking, where is the market going? Predictions from a wide range of Central London Estate Agents suggest annual growth this year of between 5.5% and 14%. Next year however, whilst no-one is predicting a fall in prices, we believe the rate of growth will slow quite considerably, particularly in the lead up to the General Election.
Until there is more certainty about who will govern for the following term and what their policies are, there is a need for both a little caution and, certainly, for professional advice.
Although 2015 may see some restriction on growth, London remains ‘the capital of the world’ (indeed according to The Sunday Times Rich List (pub. 11/05/14) more billionaires live in London than in any other city in the world) and will continue to attract domestic and international buyers. There is little doubt this means that in the medium-to-long term Prime Central London bricks and mortar remain a good investment.
Whatever the market does, London Property Search will continue to guide and advise our clients to ensure their best interests.
Sarah Van der Noot – Managing Director, London Property Search.
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