Welcome to Lees Associates’ regular look at what’s new in the prime residential market, compiled from a selection of London’s leading real estate professionals and property experts. Please visit contributor websites for more information. In this edition we look at:
Why London’s prime property market is “reassuringly uneventful” right now;
Why finding the right property is more important than the right timing; and
Why the cost of renting in PCL is soaring.
Are we in the lull before another storm?
Knight Frank report in PrimeResi that we find ourselves in a calm solid housing market after what has been a “four-year roller coaster ride”.
The disastrous mini-budget is behind us, demand is resilient and supply is recovering. Their new sales instructions are up 20% so activity levels are good. The UK is no longer heading for recession and stability has returned to government, for now at least.
But the next general election, likely to be held in autumn 2024, is slowly creeping onto the radar. “The taxation of wealth and property and the status of non-doms will all come under growing scrutiny,” they say. “It is one of the reasons we expect the number of sales above £10 million to come down by at least 10% next year”.
So enjoy it while we can!
Read more:
Taking the long view
We were fascinated by PrimeResi’s recent feature article by Professor Yolande Barnes on when is a good time to buy.
In it, Professor Barnes shows how on average, houses change hands every 20 years and“there are no 20-year periods over the last 70 years when average house prices have not grown but prospective home buyers still agonise over the timing of their transactions.” Take the last 20 years for example: an average property in the UK is worth 117% more now than it was 20 years ago.
She concludes that “it really would appear that a responsible, long-term strategy has paid off in the British housing market over the last 70 years.”
Mark Parkinson, MD of Middleton Advisors adds that this research “shows that bear markets can offer a great opportunity for the brave to acquire a dream home. For those looking to hold property over the long term it is more important to buy the right property than to obsess about timing, and – whilst supply remains tight, especially in prime markets – well-advised buyers may find they stand a better chance of acquiring their perfect home in a market where there are fewer home-hunters after the same opportunity.”
We couldn’t agree more.
The full piece is well worth a read:
Taking the long view: Why the right property is more important than the right timing
Low supply + high demand = rising rents in PCL
City A.M. reports that rent in London’s prime markets of Mayfair and Chelsea have risen by 50% in just two years due to lack of supply. Tom Bill, head of UK residential research at Knight Frank is quoted as saying “Simply put, strong demand as the economy re-opened was not matched by supply. A number of landlords took advantage of a robust sales market during the pandemic and left a sector that had become more financially punitive for them in recent years.”
Meanwhile, our friend Jo Eccles of buying and managing agent Eccord reports in Property Industry Eye that around 90% of tenants are renewing their rental contracts, with an average uplift of just 7% on rents. “They’re reluctant to take their chances trying to find something new when there’s so little stock available, high prices across the board and uncertainty around running costs in a new property”. As a result, the pool of available properties prime rental properties is very small.
We at LA have certainly found the top end rental market to be strong, with a recent property we renovated being snapped up for over the asking price before works had completed.
Read more:
London life: Why even the wealthy are paying more, as cost of renting in hot spots soars Prime London’s property market is ‘reassuringly uneventful’ right now – but things could get bumpy again soon