Richard Barber: “Some very fine new instructions have come on to the market in the last two weeks across all price ranges, including two rare first floor flats in Cadogan Square, but there now seems to be a hesitancy amongst potential purchasers. Sentiment is a strong ‘driver’ of the market and nothing curbs potential purchaser’s enthusiasm more than the prospect of economic uncertainty – and we have that in spades!
“It is interesting to see that the total stock on the Central London market, according to Lonres, now sits at just over £12 billion, as opposed to an average level of £10 billion – £10.5 billion over the last six months. This may be indicative of more stock coming to the market, but also, that more expensive houses are now being openly marketed, as opposed to being quietly, but unsuccessfully ‘placed’ over the Spring.
“There is of course good reason to be optimistic with regards London property and it has proved to be an excellent long-term investment and provider of steady rental yield, however this optimism must be tempered with a realistic view of the economic crisis which we are still very much amidst.
“While there is still undoubted enthusiasm for prime property both from domestic and international purchasers, the perceived view that every property can command in excess of £2,000 per square foot is unrealistic. Indeed, I would caution against relying entirely upon rates per square foot as a means of valuation – it is a good check measurement but by no means the whole story. Guide prices should be carefully considered and justified.
“A realistic seller should want to see two or three keen purchasers competing for their property, as nothing stigmatises a property and diminishes a vendor’s position more than a long stay on the market. In short, unrealistic vendors’ expectations and hesitant and cautious purchasers do not make for an active market!
“Analysis of latest figures show the government received £5,960 million pounds from stamp duty land tax in 2010 – 2011, a 20% increase on the previous year, with £1,980 million pounds coming from transactions within London. Counter intuitively, the Chancellor may find that by increasing the rate of SDLT on properties over £2 million and curbing foreign companies’ ability to buy central London property by imposing SDLT of 15% (and implied future measures), that his receipts for 2012-2013 are considerably less than in previous years. Indeed, the president of the National Association of Estate Agents, Wendy Evans-Scott, has called for an extension of the stamp duty holiday on lower valued properties, to try and kick start the extremely sluggish market that exists outside of central London.”
Lucy Morton, senior partner and head of lettings at W A Ellis, comments: “The herald of summer brings with it the start of the season for the family home search. We have seen a noticeable increase in families wanting to secure their homes earlier this year before the Olympics start and London goes into lockdown with traffic restrictions and an influx of visitors. Families are taking properties a couple of months early in order to avoid what many believe could bring gridlock to some of our major routes. We are already noticing an increase of security awareness in London and this will no doubt only continue over the coming months. The Olympic let market, which has been the talk of the town over the year, still hasn’t really happened – and, with some hotels now releasing rooms which they had held back, we do not believe there will be a rush of demand for short lets in Central London over this period at all.
“Rent levels have remained relatively static over the last month due to the nervousness in the market with the double-dip recession. It is quite apparent that the city corporations are still not bringing in expat middle management which has resulted in increased supply between £1,000 and £2,000 per week. The most competitive area of the market is the family house market where stock levels are low and demand levels high.”
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