Mark Parkinson, Director, Middleton Advisors comments on the current state of the property market in and outside London and offers a few predictions for the remainder of 2016 and into next year.
Prices and demand/supply of homes
“The market feels like a toned down version of the aftermath of the collapse of Lehmans, which pre-empted a year to 18 months of real global uncertainty. The currency play obscures this a bit in London- we have taken on a few clients since the Brexit vote, who are motivated because they are effectively covering their acquisition costs with the lower value of the pound. It is worth noting that they all have existing London property and are conversant with the market.
In both London and the country, we expect supply to remain tight as the only sellers are those with real motivation be it downsizing, getting rid of debt (almost no forced sellers) divorce etc are the main sellers in the market today, be under no illusion that they are all realistic! The majority of vendors in London remain 5%-10% ahead of market levels. In the country less so, but it is harder to judge what is overpriced as the trading range of any property in the country is far wider. Demand in the country has not waned since the Brexit vote. We had a record July and August for taking on clients. This is not surprising because most people take a 10 year view with a country house and there is an underlying optimism about the long term picture for the UK.”
Advice be to would-be sellers
“It’s not going to be sorted out that quickly. If you look back to the aftermath of Lehman Brothers, it was six months later (Feb, March, April 2009) which turned out to be the best time to buy in London; therefore this winter could emerge as the worst time to sell. I would hold on for as long as you can, at least until next Spring, but there are murmurings of Theresa May calling a snap general election next year……”
Buyers outside of London
“You cannot apply a general rule to the country property market and buying tactics; if it was that easy we wouldn’t have a business. We have just bought a super prime country property privately for £1m less than someone bought it for last year because of a ‘one off’ set of circumstances. By the same token we have been up against stiff competition on a few houses in the country this year. There is no ‘one size’ fits all approach, for each property know the market, who are the other buyers and where does it sit in terms of quality, is it A* or B minus?”
Prime Central London Property Market
We hear a lot about the very vulnerable new-build market in areas of high supply like PCL in general and Nine Elms/Battersea in particular. But is this in any way mirrored in the second hand property market in PCL or other ‘prime’ areas of the capital?”
“We have not seen a general trend of contamination from the new build market to the period market, although if new build begins to approach parity with period prices then we would expect period prices to fall. In terms of ‘second hand ‘ new builds in the tower blocks, yes there are examples of flats selling for less that they were bought for a few years ago. In the ‘special’ new buildings like converted warehouses factories etc, second hand prices are robust as there is far less supply; for example the converted spice warehouses at Shad Thames where we have bought a few flats over the years have always proved a sound investment for clients.”