Low tide means only one thing...
It’s not always easy to see nature at work in London’s prime residential property sector.
However, when you’ve lived in this habitat for much of your adult life –- the patterns at work in this particular ecosystem become obvious and proven.
As we enter the early spring rush – traditionally the busiest time of year in the property market– I thought I’d share a few observations that may prove valuable to anyone who owns central London property.
The market has been wintry for some time, and in keeping with the changing seasons, there is light at the end of that tunnel. There is one sure fire indicator of change going on, which is when selling behavior and buying behavior come together – the vendors are catching up with the buyers, if you like – and lowering their expectations around asking prices.
In a bullish market, asking prices creep up and everyone wants in on the action. When something unexpected occurs politically, as it did in the wake of the General Election last year in which the Tory party failed to perform and Labour surged under Corbyn, unreasonable asking prices are quickly exposed and buyers can become scarce… they sit tight until prices come down to realistic levels. This seems to be happening now, with some equilibrium being restored, as buying and selling behaviours start to move in symphony again.
As with the general election, so with Brexit. The steady influx of international business people that had seen London become one of the undisputed financial capitals of the world in the lead up to November 2015 (when the European referendum was announced in the UK) has reduced, and this has affected mid-prime housing prices more than any other market factor. With these changing migratory patterns, the stream of growth we saw between 2011 and 2015 has been stemmed to a trickle. With our European friends being more cautious on buying London houses, zone 2 has been hit especially hard, with Fulham in particular apparently being pegged back, and significant deals to be had.
Buy to let and mid-level new build properties have also suffered. There is an abundance of average stock, especially in no man’s land riverside areas – central situations that are nonetheless hard to reach. That said these properties will not sit on the market forever and the smart buyer knows, as mentioned above, that sooner or later either buying power must return or asking prices must come down.
What is undoubtedly happening is that signs of growth are starting to show in prime central London, around the core areas of Mayfair, Belgravia and Knightsbridge. This is usually a strong indicator for the rest of the market, and while there are still deals to be had on super-prime properties which had sky-high asking prices in 2015, the robust mid-upper level of prime central London is seeing more action. It could all come back very quickly once Brexit is finally resolved.
I mentioned the tidal nature of the market itself. The tide has gone out, reaching its low point – in my humble opinion - last autumn, and as creatures of nature we know that means one thing. Hesitant buyers are coming down from the fences as value and opportunity makes themselves felt for the first time in three years. There is the possibility once again of gains in the years to come, although probably not significantly until the end of 2018.
Wishing you well over the spring months.