Market Update: Prime Central London

SALES

The Easter holiday period which, for some schools means a three week break, is always seen as watershed with prospective sellers gearing up to make their homes and gardens ready to be photographed for what is usually a busy Spring market.

However, the General Election, now just 37 days away, is putting a real dampener on sentiment and the natural Spring watershed will almost certainly slip to May 7th or beyond. Uncertainty regarding the outcome in May, notably the concerns surrounding punitive tax policies threatened by Labour on homes over £2million, has meant most Central London agents are finding business is tough going.

Those focussed on the market up to £2million are busier than most, those up to c.£4million are reporting some surprisingly good prices being achieved. Indeed, Kaye & Carey have just sold a newly refurbished 3 bedroom home on Onslow Square, SW7 (the best garden square in South Kensington) at a record price for a third floor flat of £2,630 per square foot.

The market between £4million and £10million is almost non-existent and there are only a few large ticket sales happening beyond £10million. The effect of this is that many properties have been withdrawn completely or kept under wraps until market sentiment improves. Those with homes currently for sale are resigned to either waiting longer to agree a sale or, if pressed, accepting lower bids now.

One of our competitors, WA Ellis has issued a press release stating that turnover in the golden postcodes of Kensington, Chelsea and Knightsbridge in the first quarter of 2015, year on year, has diminished by 33%. We have perhaps been lucky, the number of transactions is only 10% down on last year but the average value has risen meaning turnover is virtually the same.

Looking ahead, we may well see an increase in activity as the over 55’s are allowed to use funds from pensions to invest in property, but we anticipate this will be limited to properties in the lower price bands - thus putting further pressure on younger buyers struggling to get on the housing ladder.

Further up that ladder, especially beyond £2million, much will depend on whether there are significant increases in taxation on property, particularly for foreign owners who may just as easily invest in New York instead.

What is beyond doubt is that London will always remain an appealing place to live and educate our children. Experience shows that whichever party is elected, the market soon settles down and life goes on. If the Conservatives win, an upward bounce is likely to be quicker and more pronounced, so canny buyers acting now might just see their gamble rewarded.

RENTALS

Having hit the ground running after the Christmas period and into January, come February the rental market had started to slow down. Whilst stock has been good and Landlords were choosing to rent their property rather than sell before the general election in May, applicants had been pretty scarce.

However, now that spring is in the air the market has started to pick up again. The number of enquiries are increasing as tenants come out of ‘hibernation’ and start to look for a new London rental property. Renewals are at an all-time high, as tenants decide it is more cost effective to remain in their current rental property than move on. This is good news for Landlords and we are seeing more are happier to accept that the rent remains the same rather than the prospect of losing a tenant and risking a void period.

Predictions for the rental market look good for the remainder of 2015 and beyond, despite the dark clouds of political uncertainty in the form of the general election hanging over the property sector.

The rental market is challenging and it is imperative that we shadow the peaks and troughs when it comes to pricing things correctly. Price and presentation are of utmost importance so we advise being realistic about the rent Landlords can achieve at that time and ensure the property is priced in line with similar ones. First impressions are everything, so refurbishing or even just freshening things up will ensure the property stands out from competition in order to attract a respectable tenant.