Why you should not believe the headlines you read….
Seeing a BBC headline today saying: ‘Prices in London rose at an annual rate of 17%, and increased by 4.2% in April - the steepest monthly rise since records began in 1995’ made us think that while these figures may be largely correct in some categories, the fact is the London market is never that simple.
London is a collection of villages, with each area having different characteristics and prices to reflect the wealth and status of their residents. Where some outer areas are still experiencing a shortage of stock and prices are still increasing, other more central locations such as Chelsea, Kensington and Knightsbridge are fully stocked and prices have plateaued.
But again that doesn’t tell the full story as, within those prime central areas, there are contradictions: larger family houses priced above £5million are plentiful yet flats are scarce - especially at the more ‘affordable’ end from £1million to £2million.
Where flats were once considered to be the poor relation to houses, the market today could not be more different. Values per square foot can frequently be 50% higher for flats than houses, reflecting how the profile of buyers in Prime Central London has changed. The influx of overseas buyers wanting lateral living has pushed apartment values as high as £6,000 per sq ft while only exceptional houses will achieve as much as £3,000 per sq ft. Typically, an ordinary, well lived in family house on five floors in Chelsea will sell for around £2,000 per sq ft - barely more than it would have achieved a year ago.
With flats in short supply buyers often look at low built mews houses as an alternative. They still have the advantage of lateral space as well as a garage. This was highlighted by the recent sale of a beautifully refurbished example in Clabon Mews which had three buyers competing for it at the asking price of £4,950,000.
There is no doubt we have all enjoyed a good run over the last five years but what should we expect over the next twelve months? Between now and the Summer holidays, we see the market stabilising and, with supply and demand becoming more evenly balanced, sellers must be realistic if they wish to sell before the usual lull.
With a little uncertainty creeping in as a result of the government tinkering with property taxation for both UK and overseas purchasers, pressure on property prices is likely to ease and we anticipate the market from Autumn will settle into a period of calm - certainly up until the next General Election in May 2015.