26th May 2022
Bring out the bunting and start cutting the cucumber sandwiches, the UK is preparing to commemorate the Queen’s platinum jubilee with a long Bank Holiday weekend and hundreds of street parties to mark HRH’s epic 70 year reign.
With the return of a full scale Royal Ascot for the first time since the pandemic and all eyes on Emma Raducanu at this year’s Wimbledon tennis tournament, it feels like a month of fun and festivity lies ahead.
But as anybody who has ever experienced the vicissitudes of the British summer time will know, blue skies can all too quickly evaporate.
London’s property market sailed through the pandemic, but an increasing number of pundits believe that the buying surge will start to falter as the cost of living crisis continues.
A series of studies predict a cooling market as household bills increase and interest rates rise.
Halifax bank warns that “economic headwinds” could slow, or even halt, house price growth across the UK, while property portal whathouse.com said there has been a 28 per cent drop in the number of people searching for houses in London.
The most pessimistic commentator of all is Capital Economics, which is predicting a ten per cent price drop in London by 2024, and a five per cent fall in the rest of the UK.
This all makes pretty dismal reading, but can it really be true that the property market is at the edge of a precipice? Certainly, there are some calming voices out there, like Tom Bill, head of UK residential research at agent Knight Frank. He believes that we have reached the summit of the recent period of price growth – and are in the final month or two of double digit annual growth – but there will be a slowdown rather than a reversal of price growth.
Buyers, said Camilla Dell, managing partner of Black Brick, are certainly aware of the wider macro-economic context. But they are not running for the hills.
“The biggest impact will probably be on first time buyers,” she said.
Right at the end of the market, discretionary buyers – those weighing up whether to add to their property portfolios – might also decide that this is not the time to jump into the market. Those working in the finance sector seem particularly anxious.
But Caspar Harvard-Walls, a partner at Black Brick, believes that for family buyers it is going to be a case of business as usual. “Of course everybody wants to buy well,” he said. “But the pandemic has taught a lot of people that your family home is really incredibly important – they need to be able to work from home, they want a bigger garden … Those buyers will still want to buy.”
Dell agrees. “We are still seeing houses come onto the market and disappear within 24 hours,” she said.
She is also doubtful that London’s prices are poised for a particularly bad downward drop since, compared to most of the rest of the UK, its price growth has been modest during the pandemic. “If anything, it will be the markets that have exploded in the pandemic which will see the bigger falls,” she said.
Its budget has escalated from £14.8bn to £18.8bn and its opening has been repeatedly delayed. But, finally, Crossrail is up and running.
Admittedly this east to west tube line – officially the Queen Elizabeth Line – won’t be running at full strength until next year. Right now passengers have to make interchanges at Paddington and Liverpool Street.
But when Londoners see this modern, state-of-the-art train line in action there is every chance that low key neighbourhoods like Acton in West London and Woolwich in south east London will start to gain a greater allure – journey times to the West End, City, Canary Wharf, and Heathrow will all be slashed.
“I think that it had been delayed so many times that people had almost forgotten what it actually was,” said Harvard-Walls.
“When people actually see these modern, air-conditioned trains and the really fast journey times I think there will be a huge surge of demand.”
Acton is a classic example. Current Crossrail journey times are just 22 minutes to Tottenham Court Road and from 21 minutes to Heathrow. These will be cut by an estimated eight minutes once the line goes straight through in 2022 and will make west London living a much more realistic proposition for people working in Canary Wharf and the City.
Exclusive research from Hamptons shows that average prices in the area stand at £644,994, up 59 per cent in the past decade. This makes it an affordable option for buyers who want a good quality period house and a west London address, and there are plenty of new cafes, boutiques, and restaurants indicating gentrification is well underway.
In Woolwich prices have leaped 87 per cent since 2010 but are still below £400,000, and the area is being transformed by smart developments like Royal Arsenal Riverside plus new cultural and leisure facilities. Crossrail will cut commuting times down to 21 minutes to Tottenham Court Road and around an hour to Heathrow. Again, once the line is fully up and running journeys will be even quicker.
Those hardy tenants who decided to stay on in central London during the pandemic were rewarded by plunging rents. Now the world has started to feel normal again, rents are moving back upwards again.
Rent in the capital has risen 12.3% over the last year, driven by renters returning from outside the capital, according to the latest Hamptons Letting Index.
And rental values in prime areas of London are now nine per cent higher than they were before the pandemic according to Knight Frank, with low supply and high demand combining to force prices upward.
This rapid growth could have an impact on the sales market as tenants suddenly finding their “Covid deals” no longer on the table start to count the cost of renting.
“Rents are really going up quite quickly and lack of supply is a real problem,” said Harvard-Walls. “A lot of people will rent when it makes financial sense but when it gets expensive they will get into the housing market instead.”
Another factor at play in the rental sector is the new Renters’ Reform Bill, unveiled in last month’s Queen’s Speech.
Crucially it will abolish Section 21 ‘no-fault’ evictions in the private rented sector meaning landlords have to have a legitimate reason for asking their tenants to move on. “It might make some landlords exit the market, and deter others from getting into it,” said Dell. “Potentially it will reduce rental stock levels in central London and that will lead to prices increasing.”
It is home to Battersea Power Station, countless yummy mummies living “between the commons”, and the Thames’ prettiest bridge (Albert).
And now the London Borough of Wandsworth has been named as the capital’s property millionaire hotspot.
Research by debt advisory specialist Henry Dannell found that more £1m-plus deals have been struck in Wandsworth than in any other borough over the past year as buyers flock to its leafy streets in search of family sized homes.
Almost 1,000 £1m+ properties were sold in the borough, which includes Putney, Wandsworth, Battersea, Balham, Southfields, and Tooting.
This represents just over one in ten of all £1m+ sales made in London.
“Wandsworth has got it all,” said Harvard-Walls. “It has got good transport, lots of parks, very good state primary schools, and lots of private schools. It has also got gazillions of those Victorian terraced houses which buyers absolutely love, whether they are by Clapham Common, by the river in Putney, or in The Tonsleys in Wandsworth Town.”
Anyone who needs to navigate their way through London’s complex property market should take time out to listen to Black Brick’s brand new property podcast: Finding Perfect Property – Diary of a Buying Agent.
Since 2007 we have already helped more than 500 people buy more than £1 billion-worth of property and we will be sharing our insights in how to buy the right property, whether you are a first time buyer, a family home hunter, or an investor.
Finding Perfect Property takes a deep dive into buying property – the pitfalls, the challenges, and how to get it right.
Each month Black Brick’s founder Camilla Dell and her team will interview a top professional from our little black book of trusted contacts, from financial experts to leading analysts, to expert journalists. This is your chance to hear what experts at the very top of their fields, with their fingers firmly the pulse of all thing’s property, think about today’s market.
This series will give listeners must-know top tips and is sure to become essential listening for anyone trying to find their perfect property. Watch this space for our Black Brick podcast launch!
Another date for your diary is June 21. After taking an enforced break during the pandemic Spear’s 500 Live is back, with a special one day event featuring the world’s leading experts in the worlds of investing, law, and property.
Camilla Dell will be one of the speakers, talking about the prospects for prime property in London in the year ahead.
The event is being held at The Carlton Tower Jumeirah in Knightsbridge.
For more information on how to attend click here.
Black Brick are delighted to announce that Managing Partner Camilla Dell will be visiting Jersey from Tuesday, 14th to Wednesday, 16th June inclusive and Partner Caspar Harvard-Walls will be visiting the Isle of Man from Tuesday, 21st to Wednesday, 22nd June inclusive.
If you are based in Jersey or the Isle of Man and have an interest in London property, or work with clients that are considering a purchase in the near future and would like to arrange a confidential meeting with Camilla or Caspar to find out more about the London property market and how we can help you, please email firstname.lastname@example.org or email@example.com
Our clients are a couple based in Yorkshire and they were looking for a London apartment their daughters could live in and they could also visit from time to time.
Good security and proximity to King’s Cross station were their two key requirements and we found them a newly built three bedroom apartment in the heart of trendy Shoreditch, with plenty of galleries, bars, and restaurants to for the daughters and a 24 hour concierge to ease their parents’ concerns about inner city living. The development is close to Old Street station, a five minute hop to King’s Cross.
After negotiations we were able to secure the apartment for just over £1.2m – a discount of £165,000 (12 per cent) off the original asking price and far more than our fee.
We would be delighted to hear from you to discuss your own property requirements. For a non-obligatory consultation, please contact us.