Market Review - West London Property

Expanding our service

By Keith Gorny

After the fast paced drama of the preceding eighteen months the summer offered a welcome period of relative calm in the Central and West London housing market. An increase in confidence and a supply/demand imbalance has assisted in a rapid recovery with prices being supported at a level few had anticipated at the beginning of the year.

Marsh & Parsons have accounted for over 20% of all sale transactions in the Notting Hill/Holland Park area this year, our results support the encouraging view that our local market has passed a low point in terms of both values and activity.

The national picture has grown more positive with all indices showing a decrease in the rate of house price decline and that demand for property has risen, albeit from a very low base. The Bank of England’s mortgage approval figures, while well down on levels seen during the housing boom, have been rising month on month since their January low.

While reviewing recent activity in our local area this report will assess the evidence to suggest whether or not, after 15 years of house price rises ending in the worst financial crisis since the 1930s, this recovery will be maintained.

Sustainable Recovery or Momentary Reprieve

By Keith Gorny

The UK property market has been through the deepest, most sudden slump in living memory and no part of our local market has proven immune. Being particularly vulnerable to redundancies in the financial sector we saw capital values adjust more rapidly than in any other region. In 2008, transaction activity in Kensington and Chelsea fell off a cliff with the borough reporting the lowest number of exchanges since records began.

2009 has had a very different air. More positive data is reporting growing signs of recovery and while the market may remain fitful, it looks like activity, in our area at least, has passed its low point. Capital value decline has stopped and in some instances it has been reversed. Transaction levels are no longer choked by a lack of buyers or, as we will see later, a lack of finance but rather a severe lack of property supply.

An ever greater investment in the marketing of our clients’ properties through the largest most highly experienced team in the area has enabled us to produce some excellent results for our clients this year. Since January we have seen buyer registrations rise significantly, viewing levels increase at all levels and at the time of writing our Central London offices have conducted over 35 sealed bids.

This review will take a closer look at the make up of this activity before assessing some of the principal factors that will contribute to our local market’s performance going forward. While the possibility exists that this may be a false floor, housing began its recession long before the rest of the economy and our results suggest that it has been the first to show signs of recovery too.

The value of experience

By Keith Gorny, Director

As in all of London, the development of our area is peppered with tales of boom and bust. A multitude of investments that made fortunes while others were lost. It is a story that can be read in the stunning architecture that surrounds us today. The third Lord Holland and James Ladbroke were the first to appreciate the value of the area in creating the Holland Park avenues of detached mansions and townhouses of Ladbroke Square beloved of the worlds’ wealthy today. However, both developers were severely hit by the financial crash of 1825 and the subsequent slow down in building resulted in the surrounding land being given over to horse racing and the short-lived Hippodrome Race Course. As the race course failed and the market returned to normality the land reverted to Ladbroke and was re-leased for construction and a fortune was rebuilt. The magnificent villas that constitute Kensington Park Gardens, Stanley Crescent and Lansdowne Crescent resulted. Similar tales involving speculating Reverends, Calcutta Merchants, Colonels and watch makers abound, littering the path to where we are today - living and working in one of the very finest and sought after locations on the planet.

Security through quality

By Keith Gorny, Director

In recent weeks the headlines in the neatly arranged broadsheets of the Kensington Park Road newsagents opposite my office have been less about the global credit crunch and more about record oil prices, increasing food prices and rising inflation.

After months of unrelenting “crunch” reporting do Wapping and Fleet Street’s editors believe the newspaper buying public are just bored of this flavour of gloom or can we dare to believe  that we are through the worst of this particular financial crisis? While the “golden age” of amazingly cheap, widely available debt appears to be over, there are signs that the radical steps taken by government and central banks all over the world have steered us away from a collapse of our wider financial systems.

Despite contrary reporting there are tentative signs of stability with talk of the negative equity crisis having been overplayed. Fewer people bought at the height of the market than last time round and those that did on the whole had larger deposits and appear better able to sit things out. Defaults are low. Banks do appear to be raising capital so they can return to the business of lending and recent employment data in the UK is encouraging. Investors are buying up discounted risky mortgages and in May our Notting Hill office saw a dramatic improvement on the previous month in the number of house sales agreed with a value over £2.5 million. This could be a false dawn; sensational headlines may start reporting on the negative impact recent banking turbulence is having on the wider economy and in particular the housing market. Some commentators maintain that ultra cautious lending will dampen consumption and growth resulting in job losses and a free-fall housing market. Our view is that whilst the availability of credit in the country as a whole is onerous, in London, where the majority of buyers have a sizeable deposit, the effects are less pronounced.