{"id":7411,"date":"2022-11-03T13:17:33","date_gmt":"2022-11-03T13:17:33","guid":{"rendered":"https:\/\/www.black-brick.com\/?post_type=market-update&p=7411"},"modified":"2022-11-03T16:06:38","modified_gmt":"2022-11-03T16:06:38","slug":"november-2022","status":"publish","type":"market-update","link":"https:\/\/www.black-brick.com\/insights\/market-update\/november-2022\/","title":{"rendered":"November 2022"},"content":{"rendered":"

<\/a>\"\"<\/p>\n

Bonfire of the Vanities<\/span><\/h2>\n

Another month, and another Prime Minister moving into Downing Street.<\/p>\n

After an extraordinary few weeks of political and economic upheaval, Rishi Sunak\u2019s elevation to Prime Minister last week appears to have repaired some of the damage wrought by his short-lived predecessor.<\/p>\n

The five year swap rate, used to price most UK mortgages, has fallen back down to around the same level as before the ill-fated mini budget as the financial markets calm, and the pound has strengthened, currently trading at $1.16.<\/p>\n

A more stable economic situation is good news for the housing market, which is why all eyes will be on Jeremy Hunt\u2019s Autumn statement, scheduled for November 17, with an unappetising mix of tax rises and spending cuts on the menu.<\/p>\n

 <\/p>\n

<\/a>\"\"<\/p>\n

Too Far, Too Fast: The Death of Trussonomics<\/span><\/h2>\n

London\u2019s real estate market ended summer on something of a high; prices rising, demand increasing and overseas buyers starting to return.<\/p>\n

But the bubble burst the instant the former Chancellor, Kwasi Kwarteng, stepped up to deliver his ill-fated mini budget on September 23. By October 20, the main planks of the mini budget had been torn up and Liz Truss had made history as Britain\u2019s shortest lived Prime Minister.<\/p>\n

Her brief reign undoubtedly had a big impact on market confidence.<\/p>\n

\u201cWe have got a lot of clients who are now on pause and waiting to see what will happen next because things have been happening very fast,\u201d said Camilla Dell, managing partner of Black Brick.<\/p>\n

She suspects that Prime Central London is well placed to withstand downward pressure on prices caused by market jitters plus the cost of the living crisis.<\/p>\n

\u201cSome investors, and buyers in general are really hoping that prices will come down 20 per cent, like they did in the financial crisis,\u201d she said. \u201cThey have this fixation on discounts and bargains.<\/p>\n

\u201cBut in Prime Central London only one in three people have taken debt to buy their properties.\u201d<\/p>\n

\u201cFrankly, they don\u2019t need to sell, and if prices do come down they won\u2019t.\u201d<\/p>\n

\u201cI know that is going to be very, very disappointing to some people, but buyers should be focussing on whether a property is the right home for them and their family, somewhere they are going to be able to live for ten years.\u201d<\/p>\n

 <\/p>\n

<\/a>\"\"<\/p>\n

The Price is Right<\/span><\/h2>\n

Some buyers treated the Truss imbroglio not as a problem but as an opportunity.<\/p>\n

Gazundering, the practice of making an offer on a property and then lowering it at the last minute in the hopes the vendor will be bounced into offering a deal, has reared its head in the capital in the aftermath of the mini budget.<\/p>\n

\u201cI spoke to a large Central London agency yesterday \u2013 they have seen 20 per cent of their pipeline fall through this week where buyers have tried to renegotiate prices\u201d said Dell.<\/p>\n

\u201cWhat has happened is that not only have the vendors said no, but they have also decided not to sell their property to that buyer so it is not a strategy which is working.<\/p>\n

\u201cOpportunities to buy at distressed levels will be few and far between.\u201d<\/p>\n

Inevitably there will always be buyers keen to chance their arm and this, believes Dell, means that while central London prices should remain fairly stable over the next few years, transaction numbers may well tail off.<\/p>\n

A far more constructive way to approach the delicate negotiation process is to understand both what a fair market price is for a particular property and the needs of its vendor.<\/p>\n

Do they have a mortgage? Are they truly motivated to move or are they simply testing the market? If the answer to these questions is \u201cno\u201d, a below-market offer is highly unlikely to be positively received.<\/p>\n

 <\/p>\n

 <\/p>\n

<\/a>\"\"<\/p>\n

Rarity has a Value<\/span><\/h2>\n

Across London\u2019s mainstream market, increasing interest rates are weighing heavily on housing demand.<\/p>\n

Already the average mortgaged household has been left with \u201clittle or no wiggle room in their budgets\u201d, according to UK Finance, which represents the UK\u2019s financial and banking industries, ahead of an expected further rise in interest rates when the Bank of England meets on November 3.<\/p>\n

The latest Royal Institution of Chartered Surveyors\u2019 Residential Market Survey found that new buyer enquiries fell in September, for the fifth consecutive month.<\/p>\n

And housebuilder Barratt said reservations were running at 188 per week, down from 281 a year ago.<\/p>\n

Estate agent Knight Frank responded to the new normal by revamping its five year sales market forecast. It predicts that prices will rise across London and prime central London by around three per cent this year, drop slightly during 2023, then start to recover.<\/p>\n

By 2026 it feels prices in prime London will be leading the UK with prices 7.5 per cent higher than today. Prime outer London will see price increases of almost six per cent, while London-wide prices will have inched up 0.5 per cent.<\/p>\n

For central London buyers wondering whether to buy now or wait and see, Caspar Harvard-Walls, a partner at Black Brick, has some advice. \u201cIf you are trying to buy something which is easily replicated \u2013 a period terraced house in Fulham for example \u2013 then you might wait,\u201d he said. \u201cBut if you are trying to buy something which is unique then you have to ask yourself whether you will ever find it again.\u201d<\/p>\n

The other issue is choice.<\/p>\n

In a tricky market it is not only buyers who might decide to wait and see. Vendors, equally, might decide to hold off listing their homes on the open market. \u201cThe more vendors wait the less choice buyers are going to have,\u201d said Harvard-Walls.<\/p>\n

Dell agrees, pointing out that during the height of the financial crisis the sales and marketing office at One Hyde Park was simply shut down until the market perked up. And the entire \u00a33 billion Chelsea Barracks development was put on hold back in 2013, while developer Qatari Diar awaited more favourable conditions. Construction eventually began in 2015.<\/p>\n

 <\/p>\n

 <\/p>\n

<\/a>\"\"<\/p>\n

Silver Linings<\/span><\/h2>\n

Amidst the gloom most house price indexes show prices continue to rise in London.<\/p>\n

According to Rightmove the average asking price in the British capital increased by 1.9 per cent in the past month \u2013 more than any other region in the UK.<\/p>\n

Having lagged the rest of the country during the pandemic, London\u2019s annual price growth is now playing catch up, increasing by 6.9 per cent in the past year.<\/p>\n

In north London\u2019s leafy property hotspots, Camden and Islington, annual price growth is outperforming at 11.1 per cent and 10.56 per cent up year-on-year respectively.<\/p>\n

In central London, as Black Brick forecast last month, demand has turned squarely back towards apartments.<\/p>\n

Analysis from LonRes found the average price of a prime central London flat had leaped 11.8 per cent in the last year. In some postcodes \u2013 notably St John\u2019s Wood, Regent\u2019s Park, and Camden Town \u2013 the price of flats has leaped by 40 per cent year on year.<\/p>\n

Investors are also in a strong position, as rents in the capital continue to rise exponentially.<\/p>\n

Average rents hit a record \u00a3553-a-week, with almost 30 applicants vying for each property according to the latest data from the estate agents Foxtons.<\/p>\n

\u201cIt is an interesting time to be a landlord, particularly if they have little or no debt,\u201d said Dell. \u201cI have just analysed a block in Marylebone for a client, and they are looking at a yield of around five per cent.\u201d<\/p>\n

Rents are not the only costs on the up in London. Short lets and hotel rooms are becoming increasingly expensive, to the point that it might be better value for regular visitors to buy a pied-a-terre.<\/p>\n

\u201cA really nice suite in a hotel in Mayfair now costs about \u00a33,000-a-night,\u201d said Dell.<\/p>\n

\u201cIf you are thinking of visiting for three months a year you will spend \u00a3270,000-a-year on accommodation.<\/p>\n

\u201cIf you buy a \u00a35m apartment, with a 70 per cent mortgage at six per cent, your repayments will be \u00a3210,000-a-year, plus you own an asset.\u201d<\/p>\n

 <\/p>\n

 <\/p>\n

<\/a>\"\"<\/p>\n

Acquisition of the Month: Pembridge Crescent, W11 – \u00a0\u00a31,795,000.<\/span><\/h2>\n

Our clients were an American couple who had relocated to London for work. They were living in a rental in Fitzrovia but were keen to find somewhere to buy before their tenancy expired in January 2023.<\/p>\n

With the holiday season this left them with a very narrow window of opportunity to find a two bedroom, two bathroom apartment in excellent condition. They were flexible on location so long as the property was within Prime Central London.<\/p>\n

We found them a beautifully presented and spacious apartment<\/a> on the second floor of an imposing white stucco house, on a prestigious street in Notting Hill, close to good schools and excellent shops and restaurants.<\/p>\n

Despite competition from another buyer – who offered \u00a355,000 more than our clients \u2013 we were not only able to secure the sale but also exchange contracts within 13 working days of contracts going out.<\/p>\n","protected":false},"excerpt":{"rendered":"

Bonfire of the Vanities Another month, and another Prime Minister moving into Downing Street. After an extraordinary few weeks of political and economic upheaval, Rishi Sunak\u2019s elevation to Prime Minister last week appears to have repaired some of the damage wrought by his short-lived predecessor. The five year swap rate, used to price most UK […]<\/p>\n","protected":false},"featured_media":7439,"template":"","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","inline_featured_image":false,"ghostkit_customizer_options":"","ghostkit_custom_css":"","ghostkit_custom_js_head":"","ghostkit_custom_js_foot":"","ghostkit_typography":""},"tags":[],"class_list":["post-7411","market-update","type-market-update","status-publish","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"\nNovember 2022 | Property Market Update | Buying Agents | Black Brick<\/title>\n<meta name=\"description\" content=\"Check out our market report for 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