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LONDON MARKET COMMENT
The Management of Expectations
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Above left: Belgravia SW1, £3
million guide
Above right: Queensdale Road W11 £2.695 million guide
Below: Wimbledon Village, £1.65 million guide |
With, in central London, both the supply of new stock and the volume of sales agreed some 20% down, perceptions of value are converging only where two or more buyers compete head-on. Landlords, meanwhile, are enjoying the upper hand.
The combination in the market of uncertainty and, at the time of writing at least, no real lack of money as yet, is producing some unusual results. Without a background of rapidly rising prices, the most confident, cash-rich buyer is much more careful about getting value for money. Potential sellers, meanwhile, are either sitting on their hands to see how things 'play out', or insisting on finding somewhere else before they will agree a sale (especially outside central London). Consequently, the numerical balance between supply and demand has not changed much at all, whilst hopes and expectations have gone in all directions.
Above:
Teddington, £1.36 million guide
Weybridge, £1.55 million guide
Below: Richmond, £5.25 million guide |
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Understandably, many buyers are entering the present market with hopes of getting something of a bargain. After all, with a reduced supply of credit and lurid forecasts for City jobs, sellers must be on their knees, yes? No! No one who can avoid it is putting themselves in a position in which they are likely to come under strong pressure to agree a sale. There is a real dearth of available property, and sellers are reacting coolly to low offers. As a result, those sales that are being agreed are tending to be at healthy prices - off the top, certainly but, in the main, respectably close to the asking price. More remarkable still, is that we are still seeing instances - exclusively where more than one buyer decides a particular property is worth fighting for - in which a price in excess of the guide is achieved. This, of course, boosts the confidence of other would-be sellers, stiffening their resolve still further, much to the frustration of the bargain-hunting buyer. Something of a stalemate is the inevitable result, in which a big part of our role tends to be to shed as much light as possible on the 'micro market' in question (i.e. within a few hundred yards of the property concerned). For both sides, the upshot of this is that we can still give you what you want - it's just taking rather longer.
For rentals, the London residential scene being the traditional see-saw that it is, the picture is very different. With so little property available on the sales market, demand - and rents - have climbed at a gradual but relentless pace for about a year now. Renewals at RPI (nearly 5%) are standard and, for new lettings, landlords can expect to do rather better. Most business is still corporate and, especially in more suburban areas, we are seeing more executives (or, rather, their relocation agents) with top-end budgets than for several years. With this, and the fact that the majority of our landlords are only moderately geared in mind, it is not surprising that the mass exodus from the market of less experienced landlords has not happened and, in our view, will not. Whilst the media focus is, arguably, too firmly fixed on the negative at the moment (no serious commentators, for example, are forecasting a major recession), the outlook is, at best, unclear. In such times, landlords and owner occupiers alike understandably expect real assets, such as theirs, to prove a better bet than most. |
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