We asked London prime property experts when they think the best time to buy will be in 2017, and especially if prospective buyers should wait until next spring.
Simon Barnes of H. Barnes & Co.
“In Prime Central London it is always a good time to buy, providing you are prepared; i.e. financing and legals arranged and flexible on timing. However, the closer you get to the year end, the better the deal you are likely to get. From a seller’s point of view, if you haven’t sold by Christmas, you’re unlikely to sell until early February.
Pre-Christmas, there are fewer properties available, but also fewer buyers. If buyers have their funding in place and can move quickly to exchange and be flexible on completion, they can often strike a great deal. A busy market isn’t great for the buyers, as sellers believe they hold all the cards and if they pass on the first offer, there is likely to be another to follow.
In the heart of Prime Central London – i.e. Mayfair, Belgravia, Notting Hill, Knightsbridge, Kensington – properties are holding their values and prices are strong. The outer zones appeal to a very different buyer but as prices continue to rise in central London, these outer zones will feel the ‘ripple effect’. Given the way of the world, there will always be a reason to delay and ‘wait and see’ but in that time, the likelihood is that prices will continue to rise, regardless of the zone.
I would not advise buyers to wait on the basis that it is only overpriced properties that have seen any real readjustment – i.e. where they have been overpriced from the outset. If you are a serious buyer, able to proceed, then now is as good a time as any to buy.”
Mark Parkinson of Middleton Advisors (London)
“I am recommending my clients who really do want to sell to ‘go for it’ early Spring 2017…after a long winter and a protracted period of unprecedented political, economic and security turmoil, I believe that there is significant pent-up demand that will result in a spate of activity as people come to terms with the new terrain and the realisation that irrespective of soft/hard Brexit, London is still and will always be a prime destination for wealthy international buyers.
In simplistic terms I sense that the change of season and (hopefully) weather will stimulate a feel good factor that has been missing for a long time resulting in an increased level of activity much as the market historically used to function i.e. seasonal highs and lows. This view is specific to London given our focus on the central and north west London residential market.
Letting Agents’ Fees
From a prime London perspective I don’t anticipate that the new letting agents’ fees will having any meaningful impact whatsoever on landlords selling…remarkably naive…this will simply indirectly (ultimately) result in higher rents and more casualties amongst the already much maligned and under pressure (from all quarters) estate agency industry.
My advice to would to investors contemplating purchasing in London would be to focus on properties up to £1m and ideally not more than £1,000 per square foot…don’t get seduced by paying premiums for off-plan new builds (unless private occupation is the end game) and focus more on yield rather than capital growth in the short to medium term.
Notwithstanding the above, I do still think that there is an opportunity to achieve both capital growth and decent yields in some of the central but arguably less fashionable areas of north west London such as Lisson Grove, Queens Park/Kensal Rise, Maida Hill (close to Harrow Road), Willesden/Brondesbury and some of the (currently) less fashionable backstreets of Camden Town and Chalk Farm.
I also think that the surge of interest in New Homes over recent years has created a gulf in prices between new stock and secondary homes, and as such there may be some increasingly attractive opportunities in this sector as private vendors finally succumb to market forces.
Buying Holiday Homes
As for whether one should or shouldn’t contemplate purchasing a holiday home in the U.K. the answer is yes, why not if it is a ‘holiday home’…life isn’t a dress rehearsal!
However, if being purchased purely as an investment vehicle to let then the same rules as above apply, proceed with caution, ensure that you buy well and be clear on what yield you can realistically expect to achieve, albeit unlike the London market which I see as pretty stagnant from a capital growth perspective. I do envisage some strong appreciation in the country home market which is significantly less dependent on international buyers and will benefit from unaffordable prices in London driving more and more people further out into the country, for more space and a better lifestyle at half the cost…so no point in waiting in my opinion as I predict that this is almost certainly going to be one of the livelier residential sectors in 2017.”
Charles Curran, Principal and Data Analyst at Maskells
“The view of most buyers is that the next three years is going to be very rocky indeed, but there is a great deal of optimism for the 5+ year view for the UK economy amongst buyers and sellers alike. This means that there is a ‘bottom’ to the market at the moment- no-one is panicking so that whilst some vendors are prepared to reflect the current uncertainty in their pricing, others are happy to sit it out until they get their price.
We are concentrating on finding properties for our clients in London where the sellers don’t have that luxury, then you can have a negotiation. Whether the first six months or the second six months of next year will be best is anyone’s guess, given the events of the last six months!
We are not operating in an efficient market. There is no price band or product which will naturally attract applicants in the Prime and Prime Central Market so each property offered entails a journey of price discovery creating uncertainty for the Vendor.
The market is made up of two types of Vendors – those who have to sell (Divorce, Probate, Check-in at the Pearly Gates, re-location) and those who can afford to wait. Well priced and well-presented properties may sell after 4-6 viewings whereas others (which maybe tube affected for example) may attract over a 100 viewings with no acceptable offers.
The 2017 Market will again be driven by a small number of buyers. As a Vendor, there is no “right” time to sell anymore – the transaction costs have removed most of liquidity in Prime and Prime Central London but it is worth testing the market. If an offer is received, negotiate and seek to accept as one offer does not mean another will be forthcoming. If you can’t sell, consider putting your property on the rental market and renting in the area you are considering moving to.
Viewing numbers are up by almost 70% year on year but this is not being translated into a 70% increase in property transactions. Notably we have seen a large influx of Turkish applicant and the start of the US buyer. These are event-driven buyers (US Elections & Political unrest in Turkey) and once satisfied, this demand will appease. It may well be worth putting property on the market in January to sell into this demand bearing in mind that if immigration controls are introduced, we may well see a drop off in foreign buyers 2019 onwards.
Online or Traditional agent?
This is one question we are often asked. The role of the high street agent is to create a competitive tension between buyers and push the property price up for the benefit of the vendor who is paying the agent’s fees. An online platform is not set up to offer this service: An extra £100,000 bid on a property in London may well be worth the £1,500 you would be asked to pay. This is why, for example, Purple Bricks only have 25 properties over £1.5m on their site across the UK as at 24/11/16 vs all agents in a single London postcode (SW3) who have over 290 (Maskells accounting for 10% of this total).
This tax is too high but we have not seen or heard anything which would suggest that it will be reduced or removed. Vendors and Applicants should therefore not hold out for reduction and use this as a reason to wait. There is value in the London Housing market but not at the front end of the market – that is to say, applicants should not expect to be able to buy and sell and make a profit in the first 5 years of ownership. This takes London housing away from being “trading stock” and must now be considered a home. We would however like to see an option for SDLT to be paid over the course of ownership rather than upfront.”