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Prime London market strong in sales and lettings

Richard Barber, partner in residential sales at W A Ellis, comments:

“The Central London property market has continued to confound pundits despite the huge volatility within stock markets across the globe and the continuing debt crises throughout the Eurozone and the United States. Thankfully, the widespread rioting does not seem to have had an impact on people’s appetite for London property either. The level of interest in high quality flats and houses remains strong and the past three months performance has been impressive.  Whilst we have experienced the usual slower period throughout August (particularly with Ramadan diminishing Middle Eastern interest), we have continued to agree sales, and contrary to the statistics of national websites, have not experienced sales falling through or dramatic reductions in asking prices. With 70% of overseas buyers completing on purchases in prime Central London, international wealth continues to underpin values.

“The lack of high quality stock is still obvious – home owners are seeing capital growth of around 10%, and with volatile stock markets and low interest rates, it currently makes sense to hold on to property. A client of ours who owns two extremely good properties (occupying one as his principal residence) – has decided to continue to let the other property as the yield, compared to other investments, is still good (at approx 3.2%) so he does not wish to crystallise the capital gain at this time.  This is, I am sure, a commonplace occurrence amongst potential Central London vendors.

“Naturally, there will always be vendors with property to sell and whilst the traditional ‘drivers’ of the market have been death, debt and divorce, we are now faced with the relatively new phenomenon of the discretionary seller.  This is effectively a vendor who has no need to sell but could be tempted by a ground-breaking offer and if he or she is lucky enough to be the owner of a highly desirable ‘special’ property, they may well receive one, or in some cases, two such offers, a scenario we have witnessed on several occasions recently.

“Whilst it would be foolhardy to make rash predictions against the background of continued financial turmoil, it would appear that good quality Central London property remains a relatively safe haven in these difficult times, so those who do put their property on that market are likely to achieve a good price.”

Lucy Morton, senior partner and head of lettings at W A Ellis, comments:

“July and August can traditionally be quiet months in the lettings calendar followed by September heralding a blitz of activity.  This year has been a very different story – in both months, activity and completed lettings have been 50% up on this time last year and we go into autumn with this continued frenzy of activity.

“Demand continues to outweigh supply and the press is once again highlighting the fact that we are well into generation rent with the average person having to wait ten years to save a deposit for a purchase.  We not only have those tenants who are forced to rent for financial reasons, but also the frustrated purchaser who is simply unable to find a suitable property to purchase due to the lack of stock. In addition, High Net Worth students arrived in London in their droves this month, together with the late comers into the family market who have left it to the last minute to get settled.

“This has led to heightened demand in the rental market and as such, bidding wars are common place.  It is increasingly very much a landlord’s market with landlords dictating the terms.  Void periods are well below the three week mark on a desirable property presented in first class condition and tenants are paying substantial increases to stay in their current homes.

“The short terms lettings market also continues to see heightened activity due to the impending Olympics.  With the major hotels being fully booked, there is a rush to reserve short term lettings from next July at as much as six times the normal lettings values.  It remains to be seen how many landlords will be tempted, but they should be aware that they may well be in breach of planning regulations which stipulate no lettings under 90 days. Our concern is that some may fall into the trap of making a short term gain and suffer heavy wear and tear on their property with voids either side and turning away a stable, long term let.”
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