Greater London Properties - Central London Sales Market Update
Director Rob Hill provides a detailed insight into the implications of so many external factors on the current London property market.. Is it a good time to sell? or buy? Find out his thoughts..
Much has been written in recent months about the precipice the residential market stands on and numerous forecasters have projected that prices will fall anywhere between 10-18% next year. There are multiple reasons why this could happen and at a national level the average values will no doubt reduce.
The perceived freedom of movement in working practises accelerated by COVID combined with the stamp duty holiday led to substantial prices rises in hundreds of micro markets across the country as people “escaped to the country” or “rushed to beat the deadline”. As these two principal drivers to invest have subsided some of these markets will no doubt experience falls in capital values long before any fundamental changes to interest rates.
This is not cause for panic, the residential market is full of micro markets and some of these may even see price increases over the course of the next year, so it is crucial to understand the micro market you operate in and less important to understand why prices may fluctuate at a national level if it has no relevance to you.
At an international level we are in changing times. Global inflation is increasing at an alarming rate, interest rates are rising and at a national level we are all receiving subsidies on our utility bills. Most economists would agree that this is caused by the legacy of COVID and the Ukraine conflict that has led to supply chain issues. In property terms markets respond to confidence in them and the recent rises in interest rates make people pause for breath and consider their next move or investment.
Interest rates dropped off a cliff in response to the global financial crisis in 2008 and everyone has become accustomed to “free money”. A whole generation have never known anything different, so we are now very much in an adjustment period. Owning a home and the cost of housing is a national obsession and the press feed into this obsession but for many its largely irrelevant as they, regardless of market conditions, have no interest in either buying or selling.
In Central London the pause for breath has led to a reduction in applicants actively searching and this in turn may lead to an increase in the time it takes to get an offer agreed. Once agreed if not progressed quickly this could lead to gazundering in response to the ever changing world economic outlook. I cannot stress enough the importance for all vendors to prepare a sales pack as soon as possible to reduce the time to exchange to reduce the chances of changing market dynamics being used a reason to renegotiate price. Greater London Properties offer this as a free service for all their Vendors – click here for more information.
Things to bear in mind; If you are selling to buy in the same market any falls in values on your home are likely to be mirrored in falls in value of the property you are seeking to buy, However, at some price points this could be advantageous in terms of stamp duty savings. If you are a buy to let investor seeking to exit the market now might be an opportune moment to pause and explore remaining in the buy to let market for another year or so as rents are higher now than ever before. We would be happy to look and advise you on this.
Traditionally the market slows in the build up to Christmas and that slow down is already starting in response to changing interest rates. If you are looking to invest now is the time! Finding the right property can take time and in a slower moving market you are far more likely to find a vendor open to looking at an offer or to offer greater flexibility in terms of selling time scales.
One important thing to remember is that everything is cyclical. Demand for accommodation is higher than it has ever been so once the market adjusts to being at a more historically 'normal interest rate', things could well revert back to the “new” normal pretty quickly. Central London property remains resilient, oversubscribed and for many who view it as a long-term investment it represents a very safe investment.
If you would like further information on the Central London Sales or Lettings markets or specific information in relation to your property please do get in touch on 0207 734 4062 and we would be delighted to help.
Thank you very much
Warm Regards
Rob Hill, Director
Greater London Properties, Central London Estate Agents