September 2023

Grace Under Pressure

This time last year we were living in what now seems like a state of blissful ignorance.

We were unaware of the devastating contents of the mini budget being put together by the short lived Liz Truss administration, of the slow creep of inflation which would soon trigger a long and painful string of interest rate rises, and of the winter of strikes to come.

No section of the British economy has remained untouched by these series of shocks, and only the very wealthiest have been unaffected by the rising cost of borrowing and of living.

But prime central London’s property market is continuing to hold firm against the onslaught. Average sale prices have barely moved over the past year, and serious sellers are finally coming around to the realisation that if they really want to move on, they need to make it worth buyers’ while.


Going Steady

There are many ways to assess the health of a housing market. House prices is one, of course, but transaction levels – the number of deals being struck – is another key indicator of whether a market is thriving or languishing.

And the latest research offers both good and bad news for prime London property.

On the plus side house prices have barely shifted over the past 12 tumultuous months. According to Knight Frank average sale prices in prime central London have dropped a nominal 0.9 per cent in the past year. In prime outer London – which includes upscale suburbs like Hampstead and Dulwich – they are down a statistically insignificant 0.2 per cent.

Where London is struggling is in deal numbers. Activity levels have plunged across prime London. According to property analyst LonRes transactions in July were 26 per cent lower this year than in July 2022 and nine per cent lower than the average between 2017 and 2019.

“There is a lot of caution amongst buyers, who are just in no rush,” said Camilla Dell, managing partner at Black Brick. “They are expecting pricing to go lower between now and the end of the year. Coupled with extortionate levels of Stamp Duty it is all having a drag effect on transactions.”

Buyers who do act tend to have urgent practical reasons to move – a return to the office, a new job in the capital, or a need for more space.

Others have a sense of urgency because they are anxious to make use of favourable mortgage offers before they expire.

And London’s spiralling rents are also pushing tenants towards home ownership. According to Savills rents in prime London will increase by five per cent by the end of 2023 and by almost 14 per cent by the end of 2027.

“One recent Black Brick client is an American executive who has been renting in Marylebone for a while, rents have gone up, and for him, knowing he is going to be in the UK for the foreseeable future, buying made more sense than continuing to rent,” said Dell.



The Drop Zone

At the start of the summer, entertainment mogul, Simon Cowell put his Holland Park home on the market for a reported £45m.

The price tag raised eyebrows at the time, and last month it was reported that the Georgian property had been sold, but for a far more modest £15m.

This huge price drop coincided with a report from LonRes which revealed that the number of price reductions in the £5m plus London market this year has almost doubled year-on-year.

Dell agrees that prices are being cut as vendors wake up and smell the real estate coffee but believes there is more to the Cowell house sale than meets the eye.

“That was never a £45m house,” she explained. “It was perhaps worth £20m in good times, but it is right at the end of a road, almost on a junction, so it is a very compromised location and I don’t believe that price was ever realistic.”

Realism is becoming an increasingly important virtue in today’s property market.

“Anyone who is focused on selling has to understand the mood of the market,” said Dell. “They have to be realistic, even aggressive, on pricing to get feet through the door.”

Black Brick recently acted for a client who was interested in a prime home on a garden square in Knightsbridge.

Although the property was initially on offer for £13m its price was rapidly dropped to £12m. And the vendor was subsequently willing to accept an offer of £10.5m, recognising that in the current market it was a fair offer. “Was it a steal at £10.5m? No,” said Dell. “That was probably what it was worth, and we were able to advise our clients on price based on the most up to date comparable sales. I think that estate agents really do need to be having some quite difficult conversations with their clients, because putting houses on the market and then cutting prices within a few weeks just doesn’t look good.”

Caspar Harvard-Walls, a partner at Black Brick, has also seen a change in buyer attitudes in recent weeks.

“Earlier in the summer we had a Mexican standoff between buyers and sellers,” he said. “Now there are sellers who are blinking because they and their agents have recognised that the market has changed. I suspect there will be some brilliant deals done before the end of the year.”


Saturation Point

At the height of the pandemic one of the reasons that prices shot up so fast in sought after locations was the sheer shortage of stock on the market.

Now, finally, there are signs that the supply chain is loosening up.

According to estate agent Chestertons there are 12 per cent more homes on the market now than there were a year ago, giving house hunters more options. And with fewer viable buyers searching for homes, there is also less competition.

Unfortunately, not all property listings are equal.

“I ask agents, before even previewing a property, why the vendor is selling,” said Dell. “I don’t want to waste my time or my client’s time, and it is important to know if the vendor is really serious. Now more than ever, it is just hugely important.”

Looking forward a few months, Harvard-Walls believes even more homes will come onto the market in autumn as owners’ mortgage products start to run out.

According to financial services specialist Hargreaves Lansdown, more than three million people will have to remortgage by the end of 2023 and will face the full force of the past year’s interest rate rises.

This is likely to concentrate minds on whether it is truly necessary to hold onto a large family home. “I think this is going to be especially true of people who bought second homes at high prices during the pandemic and are now seeing two year fixed deals come to an end,” said Harvard-Walls. “I think they might struggle to sell a second home in Cornwall, and that might get them thinking about their needs in London.”

Looking even further ahead, 2024 will bring the uncertainty of a General Election. Rachel Reeves, shadow chancellor for the front-running Labour Party, has made some reassuring comments around income tax and wealth tax, promising not to clobber the rich if elected. But it is still determined to dismantle the non-dom tax regime which allows people to live in the UK without having to pay tax on their global earnings.

In 2021, HM Revenue and Customs said there were just over 68,300 non doms in the UK, the majority of whom live in London.

Naturally the main political parties disagree over whether this would save money or cause an exodus of wealthy individuals from the country, but if members of this small but economically significant group decided to vote with their feet and exit the UK, it could have a disproportionate impact on the very top end of the housing market.



Back to School

Parents up and down the country will breathe a collective sigh of relief as the autumn term begins.

Schools have always been a massive driver of London’s property market as parents rush to buy homes close to top performing schools.

According to recent research by law firm Simpson Millar London homes in the catchment area of a highly rated school cost, on average 26 per cent more than the average price in their borough.

While nobody wants to pay over the odds for a property, a great, free education is becoming more and more appealing to families who might once have gone private.

Private school fees have increased by almost six per cent this year according to the Independent School Council, hiking average day school fees to almost £17,000pa and boarding fees to £39,000pa.

Even more worrying for parents is the fact that the Labour Party intends to start charging VAT on fees, adding 20 per cent to current costs.

“VAT on fees is going to push some parents over the edge,” said Dell. “It will mean a lot of parents can no longer send their children to private school, and that will place extra strain on the state school system and quite possibly increase the price of homes close to high performing state schools.”


Acquisition of the Month 1: Burnsall Street, Chelsea, SW3 – £6,300,000

Our clients were a French couple who had bought a flat close to Sloane Square a couple of years ago and were ready to upsize. They wanted to stay in Chelsea, wanted a home with good lateral space, and were also willing to take on a property in need of some work.

Realising that competition for the top properties in Chelsea is fierce, they called in Black Brick to assist and our search turned up a rare and beautiful double fronted house on Chelsea Green, an area which is increasingly popular with buyers.

“Over the last 18 months there has been a refurbishment of the green itself and a real sea change in the shops, restaurants, and cafes around it,” explained Caspar Harvard-Walls. “As a result the area is becoming much more sought after.”

Another buyer was also interested in the property and our successful strategy was to go on with a competitive offer, fractionally higher than the asking price. This secured the house and sidestepped the spectre of a sealed bids situation, where buyers must make their best and final offer to the selling agent without any insight into what their rivals have bid. This scenario can be highly unpredictable and is well worth trying to avoid if possible.

And we feel that our offer still represented good value for our clients. They paid £2,316 per square foot for the property, which does need updating. Last month a single-fronted house on a neighbouring street sold for £2,600 per square foot.



Acquisition of the Month 2: The Watch House, Berwick Street, Soho, W1 – £1,725,000

Our clients’ home is in Berkshire. But, after accepting a new office-based job in London they were keen to pick up a pied a terre to cut down on commuting.

Time was of the essence because they wanted to find a property before the job started. They wanted a turnkey property, and although they wanted to live in the West End they also needed fast tube links to Bank Station.

We found them a hip loft-style apartment in a new boutique development in the heart of Soho, with floor to ceiling windows and great views. From Tottenham Court Road the commute to Bank takes a little over ten minutes.

The flat was listed for £1.9m but we negotiated hard to secure a 9.3 per cent discount, with all furnishings and artwork included in the sale. We also helped our clients select a lawyer and surveyor who enabled them to complete the purchase in four weeks.



International: Dubai

Many of our clients own a global property portfolio, but buying overseas in unfamiliar markets requires expertise, guidance, and trusted partners. That’s why we’ve made it our mission to partner with top buying agents in key locations.

Each month we will be bringing you an “in focus” look at one of the new markets that we now cover, from Berlin to Miami, New York to Sydney. This month we take a look at the jewel in the UAE’s property crown, a location with which Camilla Dell has particularly strong links.

Whilst most world capital cities are being buffeted by economic headwinds, the forecast is set fair in Dubai. The city is basking in what promises to be a record year for property sales.

A study by Savills, published last month, found that almost 60,000 homes had been sold in Dubai during the first half of 2023, up 44 per cent compared to the same period last year, reflecting continuing global demand for property in a location with guaranteed sunshine, a favourable tax regime, and an increasingly sophisticated lifestyle offering.

Prime prices, which jumped some 50 per cent during 2022, are also continuing on their upward trajectory – albeit at a steadier pace. Residential values across Dubai rose by 5.6 per cent in the first of the year, reports Knight Frank.

This is a highly nuanced market where local knowledge is key.

In terms of price growth, prices are at their strongest for villas and townhouses, which are in relatively short supply.

This is particularly pronounced in established prime markets like Palm Jumeirah, where the price of villas rose by 14 per cent during the first quarter of the year and are up an astonishing 126 per cent since the start of the pandemic.

But Knight Frank estimates that prices stand at circa AED 4,300 (around £930) per square foot, which by global prime standards is still not excessive, suggesting there is room for further growth.

Dubai Marina, and downtown are also thriving. However not all of Dubai’s neighbourhoods are equal and Savills warns that price growth is starting to taper off in its more emerging locations like Al Furjan, Arjan, and Sports City.

Dell feels that Dubai’s property market has flourished during the pandemic, particularly thanks to the increasing number of people working from home. Its low-tax status is another incentive to buy.

But despite its many plus points there are downsides to consider before taking the Dubai plunge. The region is, of course, notoriously volatile. The quality of construction is extremely variable. And real estate brokers are unlicensed and unregulated. “The chances of you coming across a broker who is not reputable in Dubai is much higher than it is in London,” said Dell. “Trusted advice is crucial because it is very much a case of buyer beware.”

If you are considering a property purchase in Dubai, please contact to find out how we can assist you.

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