Property News – Stressed in NW6
Welcome to the Property News section of West Hampstead Life. Local estate agent Benham & Reeves will be writing about the local sales market over the coming months, giving you some sales and prices statistics for the area as well as encouraging debate around estate agent practices, development and other areas of the property sales market in West Hampstead (comments will be moderated).
Even though these articles are being written by an estate agent, I’m making sure it’s honest comment and criticism of the industry! Here’s what Darryl Jenkins, manager of Benham & Reeves’ West Hampstead office, says about the venture:
The concept has been developed in conjunction with West Hampstead Life as a way of encouraging a dialogue between local residents and mistrusted estate agents. Hopefully, it’s refreshingly different with some (though perhaps not all) stereotypes being broken along the way.
So, with that, let me hand over to Darryl for December’s Property Sales News
Stressed in NW6
The start of this venture marks the end of another challenging year of property sales in West Hampstead. Challenging for buyers, sellers and agents alike.
Buyers have faced ever-stricter lending criteria for mortgages and only the very best candidates with at least 20% deposits are being accepted. There are signs that this is starting to ease though. According to recent figures published by the Council of Mortgage Lenders (CML), the number of first-time buyers taking out a mortgage to buy a property in London between July and September was the highest for three years, although still far short of 2006/07 levels. Ownership in London remains, at 50%, the lowest in the UK.
In the West Hampstead office we have seen about the same number of new buyers registering in 2012 as in 2011 with an increase over the last few months mirroring the CML data. There are also signs that mortgage deals have become more competitive with private banks entering the market – some of whom are offering 1.99% fixed for 2 years with a 30% deposit.
Fewer offers, and offers below asking price also indicate a lack of confidence in the continued rise in prices and a reluctance to meet sellers’ price expectations, which are being buoyed by the lack of property on the market and the constant message from estate agent marketing that demand is strong.
Naturally, buyers want to buy at the lowest price and sellers want to sell at the highest price but I cannot remember a time when there have been such conflicting messages. Every day, the press highlight the challenging national and international economic situation, yet households are also receiving a constant stream of ‘record price achieved, more property required’ leaflets through their doors.
For example, we recently marketed a garden flat in West Hampstead at the vendor’s asking price of £1.5m, which 12 months ago would have been valued at £1.3m. After 30 or so viewings, we had received several offers all around £1.35m. The owner was reluctant to agree a sale at this level as he really believed the value to be a lot higher even though the market had found the level lower. After months of more viewings we have eventually agreed a sale just below £1.4m. This demonstrates the widening gap between vendor and buyer expectations. Both want to build in more of a financial cushion against the uncertainty of the market.
The next hurdle for buyers has been finding a suitable property to buy. Prices in West Hampstead are up roughly 10% this year so we’re seeing that sellers are more likely to hold onto their property in this rising market rather than sell. This is compounded by the fact that sellers are usually also buyers who have been put off by the new stamp duty increases and the general economic uncertainty of job security.
Apart from the difficulty of finding your next home, owners of property in West Hampstead have enjoyed good capital appreciation in the last 12 months. If a property has come to market at a sensible price we have found a buyer within a couple of weeks at what is normally a record price for the road or block. The difference is that the buyer is more likely to be an overseas investor than a local owner or renter trading up or buying for the first time.
This market also brings new challenges for estate agents. A recent count on Primelocation.com showed 106 separate agents advertising property for sale in NW6! Whilst I don’t expect too much sympathy (years of raking it in etc..etc..) every agent is having to work twice as hard just to stand still. Fewer properties on the market and even more agents trying to sell them has inevitably put downward pressure on fees (to be covered in a future article). This is good news for sellers but also explains why you’re getting more marketing material through your door as we all fight for our share.
This unique market, where lenders are reluctant to lend, sellers are thin on the ground, prices are rising and transactions are down has bought new levels of anxiety and stress for all. Agents have indicated record levels for the percentage of agreed sales that have fallen through this year – normally we’d expect 1 in 3, but this year it’s more likely to be 1 in 2. Lenders are taking twice as long (in some cases up to three months) to approve mortgages and surveyors and lawyers are taking longer and being beyond thorough (there’s always more litigation in economic slumps) All this means that estate agents are becoming more skilled at counselling than valuing! Holding a transaction together is now harder than any of the other sales processes, so when choosing an agent consider their life experience and people skills as well as their expensive marketing.
All in all, whether you have been a buyer, seller or agent in 2012 you are probably feeling more than 12 months older than you did in January. It’s been a stressful year.
What will happen in 2013 and beyond is clearly tricky to predict, but that won’t stop me having a go next month!. Please let me know your thoughts on the year ahead or any other comments about either the macro or micro issues of the property market.
Benham & Reeves
020 7644 9300