The property market gets back to work
With Covid-19 infection rates across the UK in decline, the first efforts are underway to restart parts of the economy placed into deep-freeze since March, not least the property market. As of May 13th, the government has allowed estate agents in England to reopen, house viewings to go ahead, removal firms to restart operations and conveyancing to resume.
We’re out viewing properties again and have restarted searches on behalf of our clients,” says Camilla Dell, Managing Partner at Black Brick. “We expect most activity in the near-term to be among domestic buyers, given the reluctance of many people to travel, and plans in the UK for a 14-day quarantine, but there is no shortage of international investors looking at potentially attractively priced London property.”
Certainly, the expectation is for near-term price falls. According to figures from Knight Frank, prices in prime central London fell 0.3% between March and April, on a limited number of transactions. Across the UK as a whole, prices rose 0.7% in April, according to Nationwide.
Knight Frank has updated its forecast, now predicting that prices will fall -5% in prime central London this year – compared with flat prices it was forecasting until recently – while Savills is now predicting 5-10% price falls.
“This might sound counterintuitive, but that is really positive,” says Dell. “Looking at the market with rose-tinted glasses will only lead to Mexican stand-offs, with sellers clinging to unrealistic views of prices and refusing to transact.”
In the next few months, most transactions will be needs-based, and driven by the domestic market. But potential buyers who are deciding to sit on their hands until September – in the hope that, by then, things will be beginning to return to normal – could be making a mistake, says Black Brick Partner Caspar Harvard-Walls. “Certainly, there’s likely to be more stock, but there is going to be huge competition. Potential buyers would do well to start their searches now.”
International investors are not letting travel restrictions hold them back. “Sterling weakness and continued low prices means that dollar-based buyers’ money is going further than ever – with discounts of more than 40% compared to the market’s peak in 2014,” says Dell, noting that Black Brick is working on a number of investment searches ranging from £10 million to £250 million.
“The embrace of new technologies such as virtual tours means that prospective buyers don’t need to visit properties for an initial viewing,” says Dell. “These are going to become fixtures of the property market even after the pandemic,” she adds.
“However, we need to be realistic – very few buyers will transact and purchase a property without actually having viewed it in person. Exceptions may be for off-plan and lower-value new build, or for an exceptionally good deal, but these are very much exceptions. What virtual tours do allow however is for buyers to get a really good feel for a property, making their visits to London far more productive when they do get here.”
Changing demand – Black Brick’s view
As in so many aspects of life, the Covid-19 pandemic will mark a watershed. The prime central London market ‘BC’ – before Covid – will likely look very different to the ‘AC’ market. Below, we consider which types of property are likely to be in greater demand and, therefore, which areas are expected to lead the recovery in prices.
Historically, lateral apartments have traded at a premium compared to houses with gardens,” notes Dell. “I anticipate a shift in demand away from apartments that might have been close to the centre of town, towards houses that might be further out, but which provide more space.”
“If people are only going into the office or to meetings a couple of times a week, they will be prepared to accept a longer commute in exchange for more outside space,” agrees Harvard-Walls. “The quality of the wifi connection will be more important that quality of the transport connection,” he jokes.
Certainly, in London’s ‘BC’ prime market, buyers could get much better value for houses than new-build apartments. Dell gives the example of St John’s Wood, with its proximity to Primrose Hill and Regent’s Park. “You would expect to pay £2,500-3,500 per square foot for a high-quality apartment in a new-build development, compared with £1,800-2,000 per square foot for an amazing house with a garden on Hamilton Terrace, Avenue Road or Elsworthy Road.”
“We might see Hampstead Garden Suburb become fashionable again,” adds Dell, as buyers revisit an area that had fallen out of favour in recent years, as buyers spending £10m plus on a home preferred to be closer to town. Dell continues, “The trend of people wanting to move to greener and more elevated parts of a city during pandemics has been around for centuries. In Hampstead, The Vale of Health was so named after becoming the only safe place in London from the Black Death of 1665.”
South of the river, Harvard-Walls anticipates rising demand for leafy Wandsworth or Clapham, which combine good schools, plenty of family houses with gardens, as well as good transport connections.
Dell adds that, looking further afield, parts of Surrey could see rising demand. “Private developments such as Wentworth in Virginia Water and St George’s Hill in Weybridge suffered from oversupply and the departure of Russian buyers from the market,” she notes, leading to discounts of up to 50% on original asking prices. “Buyers can get a lot for their money,” with prices below the £1,000/square foot mark.
Virtual tours at Black Brick…
As we note above, agents are turning to virtual tours to enable prospective buyers to ‘walk’ around a property, zooming in on particular details and even measuring from point to point.
We have started producing virtual tours for properties we are currently marketing for clients. They include: 66 Cranmer Court, in SW3, a three bedroom, two bathroom apartment which boasts excellent entertaining space and far-reaching views over Chelsea; 55 Ebury Street, SW1W, a three-bedroom flat in a prestigious portered block in the heart of Belgravia and 10 Lowndes Square, a beautifully refurbished two bedroom, two bathroom apartment with views over the stunning communal gardens of Lowndes Square.
We are now extending this service to all properties offered through our Managed Sales service.
In addition to offering virtual tours, we are also offering virtual tours in real time via video conferencing.
…And online insights
We have also been continuing to share our knowledge and expertise during lockdown by participating in industry webinars, some of which are open to interested observers.
For example, Dell took part in the Property Press Conference, with Liam Bailey, Global Head of Research at Knight Frank, Paula Higgins, Chief Executive Officer of the Home Owners’ Alliance, Richard Donnell, Director of Research & Insight at Zoopla and Sven Odia, Chief Executive Officer of Engel & Völkers.
She also spoke on the Family Office of Real Estate Advisors webinar, alongside Sarah Conway, Real Estate Partner at private client law firm Maurice Turnor Gardener, and Chris Dawe, CEO of London Mortgage Partners.
She will be speaking at other online events in the coming weeks, details to be announced.
We are delighted to report that Camilla Dell has, once again, been recognised by Spears Wealth Management, as one of the leading wealth management and luxury lifestyle publication’s Top 10 London Buying Agents.
The publication features Dell and her observations on London’s property market – given before the Covid pandemic – including her prediction that climate change and air quality issues are likely to rise up buyers’ wishlists.