The historic vote to leave the EU brought some predictable jitters to the London property market, but finally things seem to be settling back into some kind of order, with the resale market moving freely in most of the areas we serve.
We have taken on a number of new sales instructions since the vote and have placed a good (ie normal) percentage of those under offer. Most of the buyers have been first time owner occupiers who are moving to mortgage payments which are lower than their current rents.
The pattern here is no different from the first half of the year.
Investor interest is still very much present, but the mood is less gung-ho than before. We’re achieving the same or only slightly lower values compared to the early part of the year and have certainly not seen any major reductions.
You might see some different stories in the media about significant falls in London prices, but London is not a homogeneous area. It’s probably true that demand for property over £1 million will be weaker, and that the traditional “prime central London” districts of Mayfair, Kensington and Chelsea may be in for some slow months, but other areas have different economic drivers and certainly very different supply characteristics.
Talking of which, we’re seeing higher levels of completed new developments coming onto the rental market, and that is putting pressure on the rental value of older stock. Areas with large numbers of new homes such as Elephant and Castle and Nine Elms are looking financially attractive compared to more established districts like Borough, Waterloo and Vauxhall. Apartments that were only recently at the top of prospective tenants’ wish lists are suddenly looking like they could do with an update, and those tenants are reasoning that it makes no sense to compromise when they see they could have a “brand new one” only ten minutes’ walk away for £40 less per week.
Landlords in these established areas will find themselves under pressure to reduce rents, which could be a shock to many who have only experienced year on year rises in rental income. Historically such dips have been temporary as excess stock levels have been absorbed, but given the high levels of new stock availability this adjustment could take some time.
If you’re a landlord there are things you can do to offset this pressure. It becomes more important than ever to think about how you prepare and present your property, which will now be judged against pristine new developments. You might need to think about recarpeting, redecoration or updating furniture.
No market enjoys constantly upward trends in pricing, but the best way to minimise any hit on your income through these fluctuations is by minimising void periods, maintaining the attractiveness of your property and being realistic about current values. Better times will return.
For our part, because we keep our finger on the pulse of the markets we serve we’ll always give you up to date and well-informed advice about what’s going on, helping you plan ahead and optimise your decisions about selling and letting. If you’d like to discuss any of the insights in this blog contact me or any member of the team.
By Jaimie Beers
Jaimie Beers is managing director of Madley Property.