Break it to us gently, Liza-Jane - what state is the London property market currently in?
Over the last five years, it’s been a bit of a disruptive time for the property market and as agents we’ve had to get to grips with tax changes and Brexit which together have shaped an uncertain housing scene. Although it’s a relatively sensitive and challenging environment, we are definitely seeing some encouraging signs and there is positive activity taking place. For example over the last few months we’ve seen competitive bidding and even sealed bids coming back into play and this is something that we haven’t seen for a while. Because there’s less stock around, the very best properties will often see several buyers after them and that’s not just houses, we’re seeing it with flats too. Generally speaking it’s the well-priced attractive stock or project properties with the potential to add value that are doing well.
What we’ve seen across our London offices is a growing pool of buyer demand – our applicants are up by around 40 per cent compared to this time last year and that’s a really encouraging market message. Yes, there are some people who are putting their buying and selling decisions on hold until there’s a clearer understanding around Brexit. But, for others they’ve been waiting for so long that they just want to get on with things, especially when they are buyers or sellers who have a reason to move such as a baby on the way, needing more space, a job re-location, wanting to be in school catchment areas or going through a separation. It’s in the more family centric spots like Battersea, Clapham, Wandsworth, Ealing and Hackney where this is more apparent, simply because they’re predominantly needs based, domestic markets.
How might prices change this year?
In the first half of the year, the prime sales market held up reasonably well and the rate of price falls slowed. Looking at south west London, we’ve actually seen quarterly price growth of +1.2%; meaning unlike some others areas across the capital, it’s one that is showing modest annual price growth. Largely that’s down to a shortage of stock – a third of our agents operating from Fulham down to Wimbledon noted this as being the biggest constraint on their markets. What we’re seeing is that if people aren’t quick enough then they are missing out on properties simply because there is less available. The fact that buyer registrations and viewings are up as well are good things to share with clients – and this just goes back again to the fact that many of our buyers need to move for lifestyle reasons and are committed to it when they find the right home for them.
Those that aren’t active in the market right now might look in and wonder what’s happening but there are a number of indicators for sellers to be more optimistic and properties are still trading and trading well. Yes, Brexit continues to be a factor for some people considering to buy or sell but others see a property that’s right for them and are going for it. Given the heightened uncertainty around what a new prime minister would mean for Brexit, the economy and critically, tax policy, our view is that prices in the prime markets will remain sensitive across the remainder of the year but ultimately, the reality is that London is an important global city and will always be a place where people want to live, work and raise their families in.
Do you think 2019 a good time to buy?
Price falls over the last five years have been most significant in London’s highest value markets – places like Notting Hill, Kensington, Chelsea as well as the inner districts like Mayfair - and while these falls have eased back, this has left the market in these locations looking like increasingly good value. For buyers, that’s obviously an attractive prospect which has led to deals taking place.
Away from the pricier spots, there is still good activity across the more domestic markets in west and south west London. Sensible pricing is something we have been talking about for some while and in the last few months, we have started to see the gap narrow between buyer and seller expectations with more realistic pricing coming into play which is leading to sales being agreed.
For many of the buyers’ we deal with, they’re looking for a property that they’ll be in for a good few years and it could even be their forever home. Sometimes we see people hold off on offering on a place because they’ve deliberated a little too long and before they know it, they’ve found themselves in a competitive bids situation. Above all, if a buyer sees something they like and it matches their criteria, they should offer. Too often, we see people decide not to and they may end up regretting it, especially as they might not see anything else like that house come up again and instead it’s gone to another buyer.
What’s the market like for first-time buyers right now – what are their options?
It’s fair to say that first time buyers in London face bigger challenges getting onto ladder than others do elsewhere in the country. According to our analysis, last year those purchasing their first property in the capital put down around £140k as a deposit; that’s a huge chunk and why many turn to the bank of mum and dad to help them become homeowners. So it’s no surprise that over the years the average age of first time buyers in London has risen to 33; not only are people coming up against high deposit requirements now but also they might start to hit up against the limits of mortgage regulation as well.
As a result, we are starting to see more friends or siblings coming together to buy a place. For those that decide this is the best option for them, they’ll take the sensible steps to draw up the legals with a solicitor and we have had some really good examples of this working out for people who just wouldn’t have been able to get on the ladder on their own.
Once a buyer has decided that they are ready to start thinking about purchasing their first property, practical things like meeting a mortgage broker or speaking to the bank to get a mortgage in principle arranged are both really important steps. And, looking at instructing a solicitor is another key one as it means that they’ll be ready to go as soon as an offer goes in.
Are there many schemes available to help them get onto the property ladder?
For those looking to get a foot on the ladder, there are schemes and options out there to think about. For example, aspiring buyers can look for properties that qualify for the Help to Buy equity loan. This provides a government loan worth 20% of the property value (or up to 40% in London) to help raise a deposit on a new home. Buyers should move quickly though, as new restrictions will apply to the scheme from 2021. Then there’s also a Help to Buy ISA: a savings account that Government will top up by 25% if you use the money to buy a home. Finally, shared ownership is another option for people trying to get a foot on the ladder and this scheme lets you buy between 25% and 75% of a home and pay rent on the rest.
For those who haven’t done it before, what’s the best way to go about finding a property?
Looking online is a good start but it really shouldn’t be underestimated how important it is to register with an agent – and then when you have, to be as specific as you can on what it is you’re looking for. Tell an agent what you will and won’t compromise on; for example you may say no to a third floor walk-up flat but might consider a garden flat where you can add an extra bedroom for a baby’s room. Agents are registering a high number of applicants each day so it’s key to build a relationship with them so that when something hits the market, you know about it. And, there could also be properties that are off-market which without registering, you just wouldn’t be aware of. Finally, be open to their suggestions – a good agent will be able to pick up on what a buyer is looking for but also be able to introduce them to new options which they hadn’t considered but which could be perfect for their needs.
Where in the capital should potential buyers be looking this year?
As well as the more established and traditional residential locations, one of the great things about Savills is seeing the business move into and grow in new areas, too. In my role I work with teams throughout London and that means being able to visit and really get a feel for neighbourhoods right across town.
In the east, you’ve got Victoria Park, Hackney and London Fields which all have a brilliant range of housing stock from nice flats through to attractive period family homes. Generally these places offer better value than other similar neighbourhoods so we are seeing more people starting to re-focus their search over this way for that reason. Not only does the wider area have a good local lifestyle which is continually improving, for people working in Canary Wharf or the City the commute from somewhere like Hackney can be much more straightforward and could make the difference in terms of making it home for kids’ bath time and bed, or not. Even Canary Wharf is one to consider, it’s really transformed over the years with its retail and restaurants and now it’s somewhere with lots going on at the weekend. We’ve seen good levels of demand for the east this year and it’s somewhere I would expect to see more buyers’ pay closer attention to moving forwards.
Then across town, places like Ealing, Acton and Northfields will hugely benefit when Crossrail comes in. For families, there’s good schools, the parks and a range places to eat out and spend the day with the kids so it’s a well-rounded place to live. And there’s a good range of properties at all levels of the market which is important to people who are settled and want to be able to trade up and stay local. And of course, accessibility with Crossrail will mean that for people working in the West End or towards the City , it will be more do-able than ever before.
And where else in the UK, besides London, should people to look to buy?
The relative value offered in the regional prime markets compared with London is a key driver for people who have decided to the move out of the capital. If you look at places like Rickmansworth, Cobham, Sevenoaks and Tunbridge Wells, all have experienced either flat or modest price growth over the last quarter and the value and commuter links are what attract both London and local buyers to settling here.
For country house buyers, the traditional manor house market is actually looking like incredibly good value in a historical context. Our analysis shows that values are – 15.8 per cent below their 2007 level, meanwhile townhouses are closer to 20 per cent above that benchmark. So, for people thinking about selling up in London for a life in the country, this could certainly be a compelling reason to do so.
Further afield, the Midlands and the North continue to benefit from the flow of wealth out of London and prime markets here outperformed the UK average in 2018. The number of people relocating to the region for work has risen as well – Manchester is an exciting hub of a city and for families there’s some very well regarded schools, improving train connections and general amenities. These are all important considerations for London sellers who still want those familiar lifestyle touch points alongside connectivity and a good education offering. Some will choose to settle in affluent villages like Wilmslow, where prime prices have risen by 16% over the last five years, but townhouses in places like York, Chester and Nottingham are also very popular for people still wanting to be in the thick of things.
Is there anything else potential buyers should consider?
Be as flexible as you can – that could mean on location, price range or time scale. What we find now is that buyers’ are a lot more footloose than in the past which means that they could be searching in different locations across London. The perfect home could be waiting for you in an area you hadn’t thought about before so above all, work out what is important to you. It might be the commute, schools or simply more space but these things can be found in so many places across London and that’s definitely one of the best things about this city, the options that people have. Taking a morning out one weekend to explore new neighbourhoods and get a feel for the lifestyle there is definitely a good idea. Be brave, push yourself and look at properties that you may have otherwise discounted – sometimes these can be the ones people end up buying because actually, there isn’t so much of a compromise as previously thought. Plus, being flexible with exchange, completion and move in dates can have a big impact on a sale going ahead, even more so if an owner is prepared to move into a rented property to accommodate a buyer’s time frame.
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