Mark Lawson of The Buying Solution speaks to The Times about his property market analysis for the coming year.
Read more here
Mark Lawson of The Buying Solution speaks to The Times about his property market analysis for the coming year.
Read more here
It goes without saying that the last year of uncertainty amid interest rate hikes has had an instrumental impact on the real estate market. Whilst we expect the interest rate to have finally hit its peak, here is our outlook on the buying market and the shift we’re seeing in prime central London.
In a period that is traditionally one of the busiest times of the year, as we enter the autumn market, we are optimistic that London stock levels will improve, and this will continue for the remainder of 2023 into 2024. Whilst we expect house prices to further reduce elsewhere in the country, the average sale price of London prime properties has shown resilience throughout the past year, and we expect this to continue.
There is greater demand than usual from clients for turn-key properties – the appetite for ‘projects’ is low, so clients looking for a recently refurbished property in prime central London could really benefit from a buying agent. Often, we get access to these properties before they hit the open market and given that demand is outstripping supply, gaining that advantage will be crucial to being able to get the right property, in the right area at the right price.
We’ve also seen an increased demand for pied-à-terre properties in the capital as the shift to more permanent hybrid working patterns continues. I recently acted for a US client who was looking for a pied-à-terre. We helped them purchase an apartment in Knightsbridge’s most sought-after garden square address, right in the heart of the action, meeting their needs and giving them the perfect home from home.
We’re also seeing a higher than average number of clients who currently rent but are deciding to buy. Unsurprisingly, rising rent prices in London are pushing some buyers to consider the trade-off between paying rent or buying a property and absorb the Stamp Duty – especially if they intend to extend their stay in London. Regarding other London hotspots, Marylebone, Chelsea, and Notting Hill continue to be popular choices amongst my client base, but London villages are also desirable. Locations like Wimbledon, Clapham, Barnes and Chiswick offer clients a short commute to the office with plenty of family activities on their doorstep.
As buying specialists, our local knowledge is critical if a buyer is searching for something particular. We can target specific houses. If the buyers are looking in a defined area, we will often already know the houses; if we don’t, we make approaches.
Buoying the stock levels for the rest of the year are those facing re-mortgaging who will assess their options on whether to hold on to a large family house, downsize or sell a second property. Add to this the uncertainty of a general election in 2024 and the Labour Party proposing to charge VAT on independent school fees, we may see vendors choosing to leave London in search of areas with excellent grammar schools.
In conclusion, with London and prime central London readying for a busy Q4, getting the right advice and expertise from an experienced buying agent is a wise decision. Get in touch with me here if you would like to carry on the conversation.
I am often asked what the rest of 2023 could look like in terms of the market and opportunities. As experienced buying agents, we have been fortunate enough to acquire some of the most significant properties in London over the last 18 months. Due to the sensitive nature of often both the vendor and our clients, we are rarely able to discuss what we have bought. However, I can share five property-buying insights that I feel will be prevalent in the coming months.
It’s a good time to buy prime property in the capital
Despite the current climate of inflation, interest rate rises, and the prospect of a change in government, buying a prime property could still be a good option in the medium to long term.
Interest rate rises will obviously affect younger purchasers reliant on mortgages. Regarding our overall client base, I estimate that an average 60%+ (with clients spending £10m+ this figure is almost 100%) are fortunate enough not to need a mortgage when buying, so interest rates will be less harmful to them than recession and inflation. This means a housing market downturn is not going to affect older owners with more equity as much.
In addition, it could be a very good time to buy as there may be less competition from other buyers. There will be a lot of noise as to what a potential change in government may or not do and how this could affect the property market. We have seen similar cycles before, and as soon as confidence returns, the market can shift very quickly – becoming a sellers’ market again.
Our clients look long-term when it comes to investing here. If something special becomes available now, regardless of what is happening externally, many will move ahead as something similar could be years away from becoming available.
The popularity of turn-key homes
Our clients clearly prefer turn-key refurbished homes rather than embarking on a lengthy and expensive refurbishment project.
Recent property purchases across our London team were refurbished and acquired discreetly through our network. Good, refurbished family houses and apartments are in greater demand now than I have seen for many years. Clients want things now and are just not wanting to wait. They just don’t have the patience and simply do not want to lose 2-3+ years of their incredibly busy lives for a refurbishment. This is why record prices are still being achieved for turn-key properties.
London is still desirable for international buyers
The appetite for London remains strong and is still seen as one of the best places, if not the best, to live, educate children and work in the world.
The main drivers for our clients moving to the UK is typically education for their children, business and rule of law.
Security and air-conditioning are must-have items
In terms of wants, air-conditioning and security are high on the priority lists. Compared to five years ago, where 1 in 5 clients would specify air-conditioning as a nice have, it is now a must for 3-4 clients. For any ultra-high-net-worth individual, security is always a consideration. With the majority of London’s best housing stock falling straight onto the street, how best to protect a family takes precedence and will always be a key consideration.
Prime London prices will remain strong
The top end of the market will remain strong, particularly for good, refurbished houses and apartments. These are rare at the best of times, and I cannot see the demand for this stock weakening. Recently, a new record for a Notting Hill house was achieved because it is a good house but also refurbished.
We expect the domestic market to soften with more stock becoming available and prices weakening – the wide-spread view is circa -10%. Mainly as the new world of interest rates is absorbed as buyers simply do not have the firepower they once had. This will have to have some effect, although we are yet to see it. We believe it will be a busier second half of the year once these factors take hold.
Get in touch if you would like to discuss any of these insights and help to purchase the right property for your needs.