Property News: Could sale prices cool?
They weren’t forming long queues down West End Lane, but reports are that potential buyers were booked in every 15 minutes all day on Saturday and Sunday at the grand opening of Ballymore’s West Hampstead Square development. Many apartments had already been sold to ‘preferred’ clients before the launch, but it now seems that most have gone simply from the plans.
The rest of the West Hampstead and South Hampstead residential sales market has continued to reflect this voracious demand, which we see across the capital. More than 300 London estate agents recently reported buyer registrations up 50% year-on-year while new instructions are up only 17%. This makes a tight housing market even tighter, and pushes prices even higher.
Such has been the pace of this demand that I have recently found myself in the unusual situation of renegotiating prices upwards on sales that were only agreed two months previously. That’s a very high price for buyers to pay for delayed and slow conveyancing, and even more reason to make sure all your ducks are in a row and your lawyer on board when you make an offer.
As is becoming increasingly reported, most of the demand in London is being driven by overseas investors or wealthy UK-based individuals who are looking for somewhere to park their money. It’s odd to think of these buyers being prepared to spend such huge sums on property in areas they must surely often know little about. I can’t imagine many British people taking the same plunge in other foreign capitals. Nevertheless, their appetite seems insatiable and it’s happening in West Hampstead as much as anywhere. I actually sold a £3 million house to a Middle Eastern national who had never seen the property until the day he picked up the key!
Could there be a glimmer of hope for Londoners who live and work here? We’re starting to see signs of an oversupply in the lettings market, meaning that rental prices are falling in order to compete. Could a fall in yields and longer periods of empty properties deter investors, or cause them to capitalise their assets sooner? There is no doubt that sale prices will start to weaken if the rental market does suffer from over supply, as it is these investors who have kept prices high. This trend could become even more pronounced if significant numbers of renters take advantage of the Help to Buy scheme and therefore take themselves out of the rental market.
On a more personal note, I feel moved to set the record straight on what I see as the farce that is the Evening Standard’s ‘Diary of an Estate Agent’. I doubt this regular Wednesday column is top of most people’s must read list, but I get drawn to it every week. I guess it’s because I seek reassurance that my day-to-day experiences are mirrored by my competitors and thus that all is well in the world.
However, every week, some agent (normally from Knightsbridge) seems to have packed an entire lifetime’s events into five working days! Their witty anecdotes normally involve animals straight out of You’ve Been Framed videos, or swearing parrots that have reserved their hilarious commentary for the precise moment our agent steps through the door with his unsuspecting applicant. Fancy that. These viewings also seem to coincide (with astonishing regularity) with natural disasters, unruly children, leaks, non-English speaking tenants, Laurel and Hardy style building sites, buckets of water, uncontrollable bodily functions and general hilarity. Of course, it also always happens to be the week that the biggest deal in the history of the company was struck by the hero of the hour.
If only my weeks came anywhere close!
Benham & Reeves
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