Q: What is the biggest challenge facing the property market in Prime Central London (PCL) this year?
A: Shortage of supply. One major contributing factor to that is the large proportion of property in PCL that is owned by those whose main currency isn’t sterling—be they American or European or from elsewhere. While the value of the pound has improved, it’s important to bear in mind that if you’re Spanish and selling in London, you’ll be hit by a 15% discount on the value of the property (since the peak) and a 15% discount on the value of sterling. Selling agents love to highlight the fact that the weak pound is good for buyers but if you’re planning to relocate to Europe, it is a negative for vendors. That is having a substantial impact: unless there is serious motivation to sell, they won’t.
Q: Who is likely to be buying in 2018?
A: There will be those who want to buy for the simple reason that they want to get on with their lives. There are others who see this as the bottom of the market and for them 2018 could be a “buy opportunity”: the FTSE is still in excess of 7,000; the pound has improved; and Brexit is an unfolding story.
Q: Will interest rate increases have an impact on the market?
A: I haven’t got a crystal ball so this is pure conjecture but it’s unlikely that Mark Carney is going to do anything dramatic. 0.5% of an increase is not going to make a big difference to most owners. If the interest rates went up by 4%, then it would make people think again—but this is unlikely to happen.
Q: What about Brexit?
A: Brexit is an ongoing discussion with clients: some are still feeling negative about the prospect, but there are a few more people now who are feel more positive than there were before.
Q: What properties are selling and why?
A: Properties are selling when the price is right. But it’s also true to say that the stars have to been in alignment and the property has to have few or no compromises. A property in a first-class street, in a quiet location, will command a greater premium than one around the corner which is in a secondary (busier) location. Before, that secondary property might have done well. But these days, properties in what we might call the “first division” are now greatly outperforming properties in the “second division”. Additionally, there is no rush and buyers have the time to be a lot more choosey. When the market was flying, there was pressure to buy something and, when you lost out on a few deals, you’d settle for something else. Today, that’s no longer the case. There’s no urgency.
Q: What can you do to help clients in 2018?
A: The main thing we can do to help clients is simple: it’s to save time. There’s an awful lot of property out there that’s not worth seeing. We filter them out for clients. Added to that, we’re a single a voice in a noisy environment. As one client said recently: ‘It’s nice to have someone on my side of the fence acting for me and not the vendor.’ That’s our job.