West Hampstead Life

Category: Property News

  • Property News: Renters are people too

    Property News: Renters are people too

    When choosing an area to live in, what is your main priority?


    Place your vote and we’ll update you on the results on Twitter next week.

    There is a common assumption that tenants are not invested in their local area and don’t care about what is going on. When the #whampforum was hosted in May it exposed the views of a minority that ‘young people aren’t invested in the area emotionally or financially because they don’t own property, so why would they care’. That’s a huge assumption and one I would dispute in my experience.

    Tenants have often been considered a transient part of the population, but this is no longer always the case. The tenants we let property to have researched different areas and made a choice to move to West Hampstead. Many will rent for several years in the same area and are just as invested in the local community as those who own a property. Their priorities might be different (a family who own their home are more likely to participate in the free school debate than a single professional renter) but this has little to do with property ownership.

    For some, renting is a stepping stone to home ownership. One benefit or renting is that it allows you to trial out life in an area before committing to staying for longer and this type of tenant is likely to have a very vested interest in the strength of the local community. Reasons for renting aside, considering that 44% of households in West Hampstead live in private rented accommodation (12 percentage points higher than the average across Camden), tenants are clearly essential to the future of the area, economically, politically and socially.

    West Hampstead is renowned for its local village feel and community. There are numerous resident groups and local organisations that are incredibly active for an area of London. West Hampstead is unique because the high street continues to thrive with popular independent shops, restaurants and cafés and tenants are essential for their future. West Hampstead used to be considered the Ugly Sister of the area compared to St John’s Wood and Hampstead. Nowadays it is less of a thoroughfare and more of a destination in its own right, catering to its residents with local shops that thrive as they meet the community’s needs.

    It wouldn’t be right to talk about the local community without mentioning Twitter. It is an incredible source of local information (often helpfully curated by @WHampstead) and provides a resource and real life social network for those new to the area. The #whamp hashtag, with its various suffixes, has solidified the community, engaging and activating local people irrespective of housing tenure.

    As an estate agency it has always been important to us to get involved in the local community, socially and financially. We are proud to support local businesses and have done so since our inception. We take advantage of local and independent services wherever possible; from the printers we use to the independent restaurant we have team meetings in.

    Last year we designed cotton bags to help launch the West Hampstead Farmers’ Market, which has become an asset to the area. Every Saturday we look out of our office window and see how popular it is, with regulars returning week after week. Due to the popularity of the bags we recently decided to print some more with a new design. We worked with an illustrator just as passionate about the area as us to create our very own West Hampstead map, and although all of our favourite independent shops couldn’t fit on the design we hope it sums up what is special about the local community.

    Please pop into our office to collect your free #whamp bag.

    Spencer Lawrence
    Lettings Director
    Paramount Properties
    150 West End Lane
    West Hampstead
    020 7644 2315

     

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  • Property News: Tenants’ extra rental

    To accompany our regular pieces about the property sales market, Paramount is going to be covering the rental market in West Hampstead. Do leave comments (note, they will be moderated!). Even though these articles are being written by an estate agent, I’m making sure it’s honest comment of the industry and market!

    Landlords need to think long-term

    We thought we’d kick off our series of Property News articles with a question:

    What’s the benefit to you of renting?


    Place your vote and we’ll update you on the results on Twitter next week.

    How many households in West Hampstead do you think live in private rented accommodation? According to the 2011 census it’s a staggering 44%, which is considerably higher than the average percentage across all Camden Wards (32%).

    For many years West Hampstead has been a desirable place for people to call home. Renters are drawn to the area for a number of reasons, including the often cited transport links. The lettings market is based on supply and demand so it’s no surprise that, with the strong demand, the market has favoured landlords over the past few years. However we have now reached a point in West Hampstead where supply is plentiful, and as stock levels increased we began to see a downturn in rental prices.

    The supply can be attributed to three main reasons: a lacklustre employment market in financial services sectors, an increase in overseas investors and the rise of ‘accidental’ landlords. Control of the market has swung from landlords to tenants, and landlords have to be realistic about rental prices if they want to minimise void periods and protect their yields.

    Why has demand dropped? One reason is that since the census the government has implemented its Help to Buy scheme for first time buyers, which has helped a number of tenants in the area take their first tentative steps on the road to becoming homeowners. Demand for rental properties has shifted to demand for 1 and 2 bedroom flats for sale, with our sales department regularly receiving sealed bid offers significantly over the asking price for these types of properties.

    Another reason is that tenants are looking to stay for longer in the same rental property. Instead of moving home every year, tenants in West Hampstead want the stability of a home and once they find the right property they are happy to renew year after year. We support longer tenancies and encourage landlords to invest in the property for this reason.

    This type of tenant needs a flat that matches their lifestyle in order to stay, so a professional clean at the end of a tenancy is no longer enough to get a new long-term tenant in. As letting agents we don’t charge tenants a renewal fee as we want to encourage them to stay for longer as it helps minimise the landlord’s void period.

    In the last couple of years there has been a shift in the market; it is more price sensitive and product sensitive too. Landlords have to put capital investment into their property and often need to redecorate, redo the bathroom or lay new carpet between tenancies. As tenants have more choice, landlords need to make their product appealing as the rental market becomes more competitive.

    Are you a tenant in West Hampstead? What does being part of a local community mean to you? We’d love to hear your thoughts for our next Property News in October.

    Spencer Lawrence
    Lettings Director
    Paramount Properties
    150 West End Lane
    West Hampstead
    020 7644 2315

     

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  • Property News: Could West Hampstead become a ghost town?

    The West Hampstead property market has been mirroring the rest of London with demand continuing to outstrip supply in our low interest rate environment. Although we don’t seem (yet?) to have any “ghost streets” caused by the super-rich buying houses that they leave empty, the nature of buyers in our area has been changing over the past few months, with implications for prices and the future of home ownership.

    Out of 7,000 new homes built in London last year, more than 5,000 were sold to overseas buyers. It seems that the capital growth from such properties is such that these homes can stand empty for most of the year and only used as a place to stay occasionally when in town. Kensington Palace Gardens now has an average property value of £36m and, closer to home, even Frognal Way in Hampstead comes in at £9.5m!

    Aside from the impact on house prices, which doesn’t help buyers, councils have also highlighted this as a growing economic problem for the local community: unoccupied properties create no demand for local services or shops leaving empty run down looking local streets.

    Since the spring, we’ve also seen the introduction of the ‘help to buy’ scheme. Mortgage lending has risen 21% nationally since May and, according to Rightmove.co.uk, asking prices across the country have continued to rise.

    London still remains an anomaly though: prices in the capital have jumped by an average of £30,000 since the start of the year, and are now 7% higher than they were before the financial crisis. In the rest of the UK, prices remain 9% down on 2007 levels.

    What about West Hampstead? In terms of activity, we’re seeing new applicant levels on a par with last year, and instruction levels are similar although down slightly since the first quarter.

    We have noticed a change in the mix of the type of buyer, however, especially the re-emergence of buy-to-let investors. Rental prices in London have risen 7.2% year-on-year, significantly outstripping inflation and interest rates. West Hampstead has always been attractive for these investors due to our transport links and type of housing stock, but these price increases combined with the demand from those who are finding it hard to get on the housing ladder means very healthy returns and strong capital growth. In fact, three of the last five sales we have agreed were to buy-to-let investors.

    It is also noticeable that a large number of our vendors are moving out of London rather than staying locally. Rising prices and stamp duty make it impossible for many people to afford to trade up locally when faced with starting a family. We’re also seeing retirees cash in and enjoy the proceeds in a similar, cheaper property out of town or a second home abroad. Some estate agents in the Home Counties have reported a 20% increase in London applicants looking to move out. Is London becoming the new Manhattan?

    The other trend we’ve seen is that buyers are becoming more price sensitive. Earlier in the year, buyers were more prepared to ‘pay what it took’ to secure a property. Buy-to-let investors are ruled by the head not the heart, of course, so if the deal doesn’t stack up they won’t proceed.

    For the ordinary buyer, salaries are struggling to keep pace with house price growth and what may have been affordable three months ago is now out of reach. Naturally, vendors want to sell for more than their neighbour did and are also constantly consuming the price rise headlines. Throw in estate agents who are desperate to secure instructions in a highly competitive market with limited stock and it’s easy to see why asking prices are continually rising. Nevertheless, we have recently found that viewing numbers on overpriced properties are now very low whereas at the beginning of the year and last year buyers would still take a look. Dare I say it, could things be starting to cool down?

    Overall, if you are thinking of selling there is strong demand locally if your property is priced sensibly. If you find that viewings are thin on the ground, then it’s almost certain that your asking price is too high. Don’t forget that estate agents only earn a fee if they sell your property. so they have all the motivation they need to bring buyers through the door.

    Darryl Jenkins
    Associate Director
    Benham & Reeves
    West Hampstead
    020 7644 9300
    Follow @BenhamReeves

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  • Paramount scoops national award

    There are a lot of estate agents in West Hampstead. This is a truth universally acknowledged. However, as anyone who’s sat through Avatar will testify, quantity doesn’t always equal quality.

    It is, therefore, refreshing to report when one of our esteemed agents does well. Even more so when it’s not one of the larger chains, but a West Hampstead operation.

    So, credit where it’s due to Paramount who won two gold awards at The Times and Sunday Times Lettings Agency of the Year Awards 2013. Paramount won Best London Lettings Agency and Best Single Lettings Agency UK.

    Karren Brady (l) presents Carla Bradman and Spencer Lawrence with their award

    This isn’t just some industry back-slapping award ceremony, there is a degree of rigour involved. Nearly 5,000 offices enter, and the winners are determined by a panel of 19 industry experts who conduct an extensive review of the entrants, including mystery shopping exercises. The judging process was overseen by Christopher Hamer, the Property Ombudsman.

    The judges described Paramount as an “agency that is absolutely red hot on customer service, keeps up with technology and constantly strives to move forward … always looking for ways to improve the business.”

    That’ll be partly due to Carla Bradman, who lots of you know better as @west_hampstead. Carla, who runs the account, does a great job of balancing local info with property-related social media updates and engages with the community rather than trying to masquerade as a pure community resource. I’ll be honest, I’d prefer it if it used @ParamountWH as people do occasionally get Paramount’s Twitter account confused with mine but, while Carla’s hands are on the agency’s social media reins, then all is well.

    Carla herself told me “We recognise that our website is our shop front to the world and have invested heavily in design and functionality for our new website (launching next month). I personally also spend a lot of time on Twitter, Facebook and Linkedin – it’s a great way to meet new people, learn something new, promote a local cause (our coat collection for Hands on London, for example) and also allows us to respond to queries and feedback within minutes.

    Spencer Lawrence, Lettings Director of Paramount, said “it feels great to be recognised by our industry peers for the overall approach we take to lettings. The lettings team work exceptionally hard to ensure every step of the lettings process runs smoothly, so national recognition on this scale is a great reward for all of us at Paramount”.

  • Property News: Has West Hampstead just got more acccessible?

    This month sees the introduction of various welfare and tax changes and we’ve already had the announcement in March of further government initiatives to get the housing market moving, but what will this all mean for the West Hampstead market?

    The background to these initiatives has been covered in previous articles, but in a nutshell banks are reluctant to lend to buyers as they are striving to improve their balance sheets and are reluctant to over expose themselves to the housing market with risky high loan-to-value ratios. This means that first time buyers are having to find at least 20% deposits and some existing owners do not have enough equity in their homes to meet the new lending criteria and therefore can’t move up the ladder, even though they can afford the repayments due to the low interest rates.

    This situation has led to a dramatic slowdown in the number of transactions. Recent government figures show that the number of annual house sales has fallen by 50% since 2007 and that, on average, a house sells once every 25 years up from once every 15 years as recently as 2007. The implications of this slowdown on the economy and on all the related industry and services are enormous and clearly something has to be done to get things moving.

    Last month we looked at the relaxation of planning laws as a way to stimulate building work. Rather than invest in infrastructure regeneration, this government has focused on other methods both of which should boost the West Hampstead property market.

    First, from Jan 2014, the ‘Help to buy’ mortgage guarantee will enable buyers of new and existing property to borrow with only a 5% deposit. As long as the buyer is creditworthy and judged able to make the payment, the lender has the option of purchasing a government guarantee that will compensate them for a portion of its losses in the event of foreclosure. This is available for purchases up to £600,000 with a maximum guarantee of £120,000 (15%).

    This is very good news for the NW6 market; a significant part of the property for sale in our area is valued between £350,000 and £600,000, so given the attraction of owning versus renting, this access to mortgages with a 5% deposit should be hugely beneficial. It will also make it easier for owners of first-time buyer properties to take the next step on the rung to owning a 2- to 3- bed property and improve supply all round.

    The second part of the scheme is for new build properties only. This provides a loan directly from the government of up to 15% of the property value (capped at £500,000). There will be no charge for this loan in the first five years, then in the sixth year a 1.75% annual charge is levied. This will be adjusted in line with the RPI every year (~+1%). Again, for the lower end of the West Hampstead market this can only be good news. Most new build developments in the area have starting prices of around £400,000.

    The criticism levelled at these schemes is that they will create another housing bubble. Artificially creating demand could lead to unsustainable over-priced housing and put us exactly where we were when the bubble burst in 2007. The government has said that these schemes will be available for only three years, so the impact should be limited in the long run but give the market a much needed kick start by providing access to home ownership that has been denied to many Londoners in the short run. Given all the failed attempts to get banks to lend again at least something different is being done to help.

    At the upper end of the market, the scrapping of the 50p tax rate for high earners came into effect on April 1st, and this too should hopefully stimulate demand among those with higher levels of disposable income.

    As usual, please let me know your thoughts. Has one of these schemes meant that you can now make the move you were hoping for? What else could be done to stimulate transactions?

    Darryl Jenkins
    Associate Director
    Benham & Reeves
    West Hampstead
    020 7644 9300
    Follow @BenhamReeves

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  • Property News: Planning for disaster?

    The first days of spring seem to have come and gone, but we are now looking forward to what are traditionally the three best months for residential sales. However, while prices are on the up locally, the government’s attempts to stimulate the construction industry may not be enough to dampen demand and risk blighting our neighbourhoods.

    As previously reported, the property market in West Hampstead has started buoyantly this year. With buyer numbers up and slightly more property coming to the market, we have shown a 50% year-on-year increase in the number of sales agreed for January and February. I know other local agents are reporting similar stories.

    The latest data from property analyst Hometrack indicates that national house prices rose by 0.1% in February. This is the first time since May 2012 that rises have been reported for nine consecutive months. The report also indicates that the north/south divide is growing further: Fewer than 1 in 7 postcodes across all of England and Wales reported an increase, but when you look just at London, that jumps to almost 1 in 2 (meaning they account for three-quarters of those national rises). This indicates that although there are some signs of recovery for the national market, London is still powering ahead.

    The reasons for this demand have been well documented by the press and in this column. The government is hoping to capitalise on this demand and get the economy growing by stimulating the private construction industry (worth 6% of GDP and almost £100 billion), which is forecast to decline by 2% in 2013 following a 6.3% drop in 2012. This fall is largely due to a 14% reduction in government spending on infrastructure and construction projects.

    The biggest concern is that only 118,000 new homes are expected to be built in 2013. I realise it may seem as if the majority of these are coming to sites around West End Lane; the reality is that this total is predicted to be only half the actual demand. The government has identified planning red tape as the issue and is temporarily relaxing planning laws in an attempt to generate more building. However, the Local Government Association, which represents local councils, says that there are currently 400,000 sites across the UK that have planning permission to build and that roughly half of all applications are eventually granted.

    Of course, what it really comes down to is money – profit and availability. Developers are only interested in sites that return a profit, while more often than not local councils’ insistence on provision of affordable housing (or payments under section 106 agreements) in new developments often make these sites unprofitable. Meanwhile, former industrial or landfill sites require expensive cleaning operations and are normally in lower cost and less desirable areas. Developers want prime sites on which to build prime properties. It’s no wonder that house builders are sitting on large land banks in greenbelt areas just waiting for the value to shoot up when permission is granted. In addition, the financial crisis has led to less available funding for building, more financial penalties for missed repayments, and banks requiring more collateral. 

    At a micro level, the government is trying to kick-start the construction industry by enticing us to build more extensions and conservatories through this three-year period of relaxed local planning laws. Now, you no longer need planning permission to build loft conversions or single rear extensions that are less than 6m or 8m from the back of your house (whether a semi or detached). Again, this assumes that funds are readily available to complete these building projects. Neighbours still have the right to complain and halt construction and any flat still requires planning permission for any building. I fear this policy will lead us towards half-finished, half-baked and ill conceived designs that will be refused retrospective consent when this temporary period finishes.

    There is clearly a significant social and economic issue regarding available housing and accommodation in London and the UK, but planning procedures and consultations exist to protect individual homeowners from ‘blot on the landscape’ developments and over ambitious neighbours. Relaxing these laws is unlikely to lead to economic stimulus or benefit local neighbourhoods. Perhaps, in true Keynesian fashion, the government could consider increasing its spending on larger-scale house building projects to give the industry and economy the kick-start it needs?

    In the meantime, a lack of available property and new-build investment, together with an insatiable demand continue to drive house prices upwards in South and West Hampstead.

    Do let me know what you think? Are you planning to take advantage of the looser regulations on extending properties? Are you happy to watch your house price rise through undersupply in the market more generally?

    Darryl Jenkins
    Associate Director
    Benham & Reeves
    West Hampstead
    020 7644 9300
    Follow @BenhamReeves

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  • Property News: Why sellers tolerate fees

    The start to the year has been very encouraging for the sales market in West Hampstead. It seems that the government Funding for Lending scheme, introduced six months ago, is starting to have an impact on the availability of loans while overall rates for borrowing are now at their lowest levels since the start of the recession.

    It is hard to quantify exactly how much of an effect the scheme is having but there is no doubt that new applicant and viewing levels are up significantly from January 2012, and there’s an increased level of confidence in the market from agents and sellers alike.

    Further good news for buyers is the government’s announcement that later this year it intends to allow empty office buildings to be converted into residential homes without the need for planning permission. This should relieve some of the upward pressure on sales and rental prices and is estimated to create an extra 100,000 homes across the UK.

    This month I also wanted to raise the thorny subject of estate agents’ fees. According to the Guardian and Halifax Building Society, between 1959 and 2009 house prices have risen by 273% while real earnings rose 169%. Estate agent fees have not changed much in percentage terms over that time, so it would seem we are therefore earning more in real terms for the same job.

    Is this what causes the ill feeling about estate agents? After all, in London we are talking about £40,000 (ex. vat) for selling a £2m property or even £10,000 (ex. vat) for selling a £500,000 flat (the price of an average 2-bed in NW6). On the face of it, not great value. Throw in the fact that ours is a largely unqualified profession governed by a mainly toothless Ombudsman scheme (although there are signs that it’s finding its bite) and even we can see why some of that negative sentiment arises. Fees for your estate agent far outstrip those for your conveyancing lawyer or RICS qualified surveyor. Hardly seems fair?

    However, I suggest that there is a love/hate relationship between seller and agent and that although our fees seem high we can justify this and that secretly, sellers don’t really mind paying them.

    This thought came to me while reading about Tesco’s failed venture into estate agency. Like many others, it invested into an online-only estate agency. The premise was that sellers, fed up with high fees, could advertise their properties online, take enquiries, conduct viewings and negotiate a sale all for a few hundred pounds. Other companies have tried various different versions of this model; some offering a negotiation and sales progression service and others a lower fixed percentage. None have yet succeeded.

    It intrigued me that although sellers complain about estate agent fees when they were given the opportunity to pay less, they didn’t take it. I conducted some very basic market research: I emailed 25 of my friends and family and asked them to rank in preference what makes them decide who to appoint to sell their house: a) fees. b) local reputation c) recommendation d) personality/liked the agent or e) sold in my road.

    Only one person replied that fees were the most important factor, and most placed it at the bottom of the list. It would seem that there is value in local knowledge and a track record, and that sellers do put trust in their agent to do the best job for them. I would argue this is because agents invest thousands in up front costs, creating a market place where property can be sold for the best possible price.

    High street premises, newspaper advertising, expensive websites, numerous property search sites (whose prices go up exponentially each year), staff, sponsorship, marketing, petrol, cars etc.. are all up front costs designed to attract buyers for your property. This demand creates a market where you will be assured of achieving the market value of your property.

    Another aspect of estate agents is that they have played a significant part (rightly or wrongly) in pushing up property prices over the last 50 years. Competition amongst agents and sellers’ desire to get the most money they can for their property means that every new instruction comes to the market at a slightly higher price than the last. This has contributed to huge amounts of personal wealth being made through the property boom of the last 50 years. Is part of the reason we accept the fees because the money we make is almost like Monopoly money that we have not seen and wouldn’t have made otherwise.

    Property is usually a family’s single biggest asset and, naturally, when selling you want to be absolutely sure that you will be getting the best possible price. It seems that when it comes down to it, sellers do consider the agents the experts.

    I would be interested to hear your views on this. Next month, we’ll look at the importance of development and consider whether homeowners and local authorities have too many rights to prevent it.

    Darryl Jenkins
    Associate Director
    Benham & Reeves
    West Hampstead
    020 7644 9300
    Follow @BenhamReeves

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  • License landlords or resort to Asbos?

    This month Newham will become the first council in England to require private landlords to be registered. Meanwhile, Camden has already served the country’s first landlord asbo to a West Hampstead landlady and has sought this week to extend it in court. Over at City Hall, Boris is proposing a “new housing covenant“, which puts forward some changes to tenancy agreements in the favour of tenants under a London Rental Standard.

    The idea of licensing is to root out and stiffly penalise rogue landlords – the sort of people who exploit tenants by cramming lots of people into poorly maintained houses and then charge them an extortionate amount of rent. It also means that people who decide to rent their property out for lifestyle reasons rather than for pure profit must also register – there are a lot of these people. Many in the industry think that the licence requirement is overkill and that there are more cost-effective ways of protecting tenants from rogue landlords.

    Last year, Camden opted for a different approach. It served a two-year anti-social behaviour order on Catherine Boyle of 14 Iverson Road back in January 2011, and sought to extend it at the end of 2012 after she failed to comply with some of the court’s requirements.

    Google Street View catches a pest control
    vehicle parked outside 14 Iverson Road

    Catherine Boyle lives in and rents out rooms at the property, at the Kilburn end of Iverson Road. It qualifies as an HMO (house of multiple occupancy). She has been banned from causing harassment, alarm or distress to her tenants, entering their rooms without their consent, and cutting off their gas and electricity supply. She was also fined £8,000 for failing to comply with fire regulations despite having been given more than six months to meet the requirements (more than half of this was to pay the council’s court costs). In August 2010, she was cautioned for assault against one of her tenants.

    Asbos seem like a pretty drastic solution to tackle problem landlords. They remain practically unheard of – the only other example that comes up is in Plymouth, where the council is appyling for an asbo against a landlord that would prevent him from letting to anyone on housing benefit. Councils do already have considerable powers to fine landlords heavily, especially those letting HMO properties, and jail sentences are not unheard of. The council can also takeover the running of the property.

    In Ms Boyle’s case, I understand that there was both bad behaviour, as well as non-compliance with regulation, which may have been why the order was sought.

    What is not clear to me is why a licensing policy such as Newham’s need to be applied to all landlords. Reserving it for HMO landlords, or even those with multiple properties would save time and money for both the council and plenty of ordinary landlords. This might be combined with a compulsory training program.

    The Mayor certainly argues against any additional regulation in his private rented sector (PRS) report:

    The Mayor does not support top-down regulation as a way of achieving better management or more choice for tenants, not least because the GLA does not possess formal powers in this area. In any case, regulation is damaging for investment into the PRS and it should always be a last resort. The sector’s capacity for voluntary self-regulation has not yet been exhausted – indeed, with the support of the Mayor, boroughs and landlord organisations, voluntary accreditation can deliver the step change in standards that tenants are rightly seeking. It is also unfair to penalise the majority of law-abiding landlords because of the actions of a small minority.”

    It does seem that the system of landlord accreditation could do with some consolidation.

    What do you think? Should councils use the powers they already have to deal with rogue landlords or are licensing or asbos the way forward?

  • Property News – What will 2013 bring?

    As homeowners and buyers we all have an opinion on what property is worth in our area. Indeed, many people have made a fortune by speculating or even just by staying put while prices have risen.

    In previous decades this was a hot topic of dinner conversation, but since the advent of the internet, property prices have become very transparent. You can now find your address on zoopla.com, fill in a few details and be told in an instant what your house or flat is worth.

    What is now more difficult to predict is what might happen next. Lets take a look at the factors affecting house prices and demand in West Hampstead for the next 12 months and I’ll give you my best guess on where we could be at the end of this year.

    Successive governments have promised the end of ‘boom and bust’, but none have been able to deliver. House prices have ebbed and flowed with the economy, gone pop when the bubble has burst, and then recovered to start the whole pattern again. But, as a nation fixated on home ownership, we have all willed prices ever upwards and this longer-term trend has almost become predictably reassuring. After all, despite the ups and downs, London prices doubled every five years up to 2007.

    This time, however, I think things are a bit different. There is now a huge difference between London and the rest of the country. Legal and General predicts that the UK market has now hit bottom but prices will not start to recover until 2017. Prices in London, meanwhile, have already far outstripped their 2007 peak and in some prime areas they are already 50% higher! The difference is that this price increase is being fuelled by the high demand for the relatively few available properties – transaction levels remain half of what they were in 2007.

    West Hampstead sellers must face the decision of whether to hold out for another 12 months in a rising market, or whether to sell and pre-empt the possible bursting of the bubble. Buyers of course are hesitant to commit at prices that might tumble, but are more anxious about not eventually paying more for the same property if they wait, especially if they have to move. Lenders are cautious for the same reasons and require more security and certainty. These factors, together with overseas buyers looking for a safe haven for their cash, have all driven the increase in London house prices since 2010.

    The big question is how long can London prices keep going up? The answer seems to be for quite a while longer. There is no indication that the factors affecting prices will change in 2013. Supply will remain low and demand high. Recent news regarding increased lending at lower rates will create more room in the market for price rises, and the levels of investment in new-build housing remain at record lows. The only threats to further price rises would seem to be a sudden interest rate rise or the impact from another global economic shock.

    In their recent forecasts, Knight Frank, Hamptons and Savills all predict a levelling off of prices in London with small rises of between 1% and 2% in 2013. This seems cautious to me (they said 2–5% last year) so I shall stick my neck out and say we should expect to see rises of between 5% and 10% in West Hampstead in 2013. The basic economics of supply and demand is my reasoning.

    Thanks for all your comments and feedback from last month, please keep them coming. Next time, I’ll look at how estate agents work and raise the sometimes controversial issue of fees!

    In the meantime, I wish you all a happy and prosperous 2013.

    Darryl Jenkins
    Associate Director
    Benham & Reeves
    West Hampstead
    020 7644 9300
    Follow @BenhamReeves

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  • 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.

    Darryl Jenkins
    Associate Director
    Benham & Reeves
    West Hampstead
    020 7644 9300
    Follow @BenhamReeves

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