The Homes One Market Prepared for our friends at Prime Resi.
Since the market has reopened, my UK-based clients have started to resurface after a long period of forced inactivity.
I have been somewhat surprised to see the immediate rise in viewings and even more surprised at the amount of properties going to competitive bidding.
I have recently been advising on two deals at either end of the market that both resulted in competitive bids. One was a house in Belgravia and another was a unique one-bedroom flat in Notting Hill.
When there is so much uncertainty in this current climate, why are some properties attracting this attention?
Two-tier market
While much of the market is still in stasis, best-in-class properties will always do well. Non-repeatable properties, usually period properties and architectural one-offs without major compromises, are being fought over. If they are valued correctly, these properties can achieve strong prices. As stock is low, prices will remain stable.
In both purchases I was advising on, I found that sellers are looking for certainty; they will take a lower offer if they feel the buyers is able to perform quickly and without borrowing. My cash buyers were in fact favoured over a higher bid.
Outside the realm of best in class, buyers are able to find good deals, with 5-8% savings on prices from the turn of the year. The reason this pandemic has not caused a larger rupture is because prices had already fallen to a perceived low. This is different to 2008 when properties were at record highs and had further to drop.
The Autumn gamble
This of course could all change if we experience a devastating second wave. I know many of my clients are waiting till the Autumn when the spectre of Brexit will loom large and the colder weather sees infections possibly rising. That will probably be the time to snap up a bargain.
However this is a gamble; if a vaccine or effective medicine is found and a good Brexit deal is negotiated, prices will rise quickly.
Local buyers are hungry
Local core buyers are those who have been preparing to buy for ages – they have either been saving or have waited before trading up to a bigger place. They have been forced to put their plans on hold, first waiting for clarity on Brexit, then waiting for the general election – and then the lockdown… As markets started opening, they are using that pent up energy to acquire properties they really like.
It’s itchy trigger fingers and I think they are excited to be back with a chance to complete their dream move...
Localisation is strong
The trend away from globalization towards localization is happening at full speed. We are seeing a return to more traditional family values and friendship. Foreign buyers are scarce at the moment, but local buyers are back. The return of community is the natural result of people being grounded in one place for any significant period of time, and this may become normal if a second wave of the virus hits.
This means that local buyers are valuing home more than ever, and I’ve had several conversations with buyers who want to upsize and strengthen roots in their communities, because that feels natural, nourishing and safe to them.
Best in class at whatever level will always be hard to buy, and Covid-19 will not affect this.
Link to original article: https://primeresi.com/on-the-two-tier-market-localisation-the-autumn-gamble/
Wishing you all the best with navigating these uncertain times.
Warmly,
Karim