Although temporary uncertainty around Brexit negotiations is having an effect on the housing market in London, prompting a ‘wait and see’ approach amongst many potential buyers, properties are selling and we believe the market is now bottoming out. The proviso is that sellers must be realistic about the price they expect to achieve.
After decades of property price rises, the last couple of years have seen prices in London fall slightly – Nationwide, the UK’s largest mortgage provider, reported that sales values in London fell by 0.8% in 2018. These dips in the market usually coincide with a political or economic event and are nothing new, occurring regularly over the last few decades – the most recent, of course, following the 2008 financial crisis. But the London property market is nothing if not resilient and after a slowdown in the market, growth usually accelerates immediately afterwards, as pent up demand is released. If a buyer can hold their nerve, during a downturn is usually a good time to buy, with properties offering good value.
So while many buyers and sellers are putting their plans on hold, even for a short while, we expect stability and confidence to return gradually once the March 29th deadline passes and the way forward becomes clearer.
Buyers are looking for the right opportunity
In the meantime, we are continuing to work with buyers looking for good opportunities to expand their London property portfolios. Buyers remain cautious and understandably, most are not in a rush to invest, but London property remains attractive in the long-term so they will purchase if the property and the price are right. UK-based investors are active in the market, as too are overseas investors – from China, Singapore and the UAE in particular – the weakness of sterling continues to make London property very affordable to these overseas buyers. Many are also buying off-plan in new developments, indicating a continuing confidence in the long term potential of the London property market.
Of course, buyers are looking for a good deal but there are few ‘distressed’ sales around at the moment. Instead, we are finding that fewer properties are coming to market, limiting choice, so a knowledgeable agent who has contacts with property owners in their chosen locations, is more important than ever.
Buyers tend to look in areas they are familiar with, or stay loyal to developers from whom they have previously bought properties. But we are now finding more investors looking for properties beyond the traditionally popular prime central London areas in Zones 1 and 2. Increasingly, they are looking at developments in Zones 3 and 4 where sales prices are lower and, with rental demand high and increasing, rental yields are higher too.
For example, a one bed apartment in the Alaska Building in Deptford, an emerging area of regeneration in east London which is, in fact, in Zone 2, can be purchased at the moment for around £315,000 and should attract a rental of £288 per week, producing a very healthy yield of 5.14%. Local knowledge is essential in order to source these opportunities.
Realism is the byword amongst sellers
But there is no doubt that this remains a challenging market for sellers. Realism is key. Accurately priced properties are still selling well so anyone thinking of putting their property on the market should listen to the advice of their sales agent and obtain an accurate valuation. We have worked with many of our clients – both buyers and sellers – for many years and we have successful working relationships based on trust. We offer transparent advice and will always be honest with our clients as to how much we think a property will sell for. There’s just no point inflating the asking price – investors won’t pay over the odds for a property and it will simply fail to attract interest from serious buyers.
If the client cannot realistically achieve the asking price they need and decides not to sell at the moment, the rental market is phenomenally strong right now so letting the property is usually a good move and should help the landlord achieve a good rental income.
If you are looking to buy a property in London, or considering selling one from your existing portfolio, please contact our London sales team who will be happy to assist you with an up to date valuation.