The Sunday Telegraph: Predicting the Future
Sun 30 Dec 2012
In 2009, Luca and Lavinia Martino bought a classic Victorian terrace house in Clapham, south London, for 717,000. Now they have offered it for sale at 1 million and have had four or five viewings in the first week. They are among the many accidental property millionaires created by the strange times we live in.
Other sellers may struggle, and the number of sales may only be a third of what it was in the boom, but people who have bought in certain "micro-markets" continue to do well. The Martinos have both worked hard to pay for their house, he in the financial sector and she as a maritime engineer. They employ a live-in anny to help with their two girls, Daphne, 4, and Lucrezia, 2. Space is tight and they want somethingbigger. "We need to cash in now and invest more in another house," says Luca.
Does the property market here seem crazy compared to Rome, where they come from? "Prices are about 25 per cent higher than in Rome," says Luca. There is talk that London is overheating, but international money continues to flow and some sellers are hanging on to their city assets rather than moving to the country where the doldrums may lurk.
The recent census says it all. Home ownership has dropped to 64 per cent of the population and private renters have increased to 15 per cent, affected by the high prices and the need for large deposits.
In 2013 we will see downsizers doing most of the selling, families struggling to find the right house to buy, second-steppers finding it hard to make the jump, and the young optin to rent. Yet enterprise will spring afresh as more people start businesses from home.
Prices are they key issue. Savills predicts that property prices will flatline through 2013 but begin to grow again in 2014.
"It will require London and the prime suburbs to remain active, and it could be 2016 before the effects of wealth migration are felt right across the country's prime markets," says Yolande Barnes, director of Savills world research. So, what will be the trends in the year ahead?
More property millionaires
Strange but true. Around 43 per cent of homes in prime central London are valued at 1 million, an increase of 8 per cent on a year ago, according to the Marsh & Parsons London Prime Market Monitor. Property wealth is, however, spreading out of the traditional Kensington and Chelsea zones, south and west to areas such as Balham, Claphman and Brok Green. "Properties no longer have to be palatial to be worth 1 million," says Peter Rollings, chief executive of Marsh & Parsons.
Prime commuter hot spots around the capital are expected to feel the house price ripple during 2013, according to Savills. Areas such as Sevenoaks, Guildford and Beaconsfield will see rises of one per cent. The longer-term forecast shows a five-year growth of 21 per cent in the prime inner commuter zone and 19 per cent in the outer commuter zone. House search agents The Buying Solution says people will bypass the Cotswolds to find new affordable areas. "We anticipate more demand in places such as Worcestershire, Herefordshire and beyond Bath," says Jonathon Bramwell of The Buying Solution.
Renting will become more expensive, with a rise of 18 per cent predicted during the next five years. Search agent Finders Keppers in Oxfordshire says first-time renters are now in their late twenties or early thirties, much older than five years ago (it is taking them longer to find work and they are hampered by student debt.)
In central London, international students are vying with bankers for flat rentals. London Central Portfolio Ltd reports that 37 per cent of its properties go to bankers, while 29 per cent goes to students from around the world, paying an average 32,805 per year. One-bedroom and studio flats are the "hardest-working" sector of the market.
London to lead the way
London is likely to tread water in the year ahead, but Savills predicts rises of 3 per cent to 4.5 per cent in 2014, which may start the recovery. Prices might then rise by 21 per cent by the end of 2017. When the recovery comes, transaction levels could rise by about a third but will still be 28 per cent below what we became used to in the past few decades.
Eco Homes: The new rectory
"Enviromentally friendly, modern homes that require no work are replacing the old rectory as the enw dream home," says James Mackenzie of Strutt & Parker. "Eco-sensitive houses and properties that are extremely cheap to run will do particularly well in 2013. We will see increased demand from both ends of the market - downsizers looking for the perfect home with no extra costs, and families moving up the ladder."
Houses that earn a living
West Country estate agents say that enquries for houses with cottage lets are up by 50 per cent. Napoleon Wilcox, head of Webbers Fine & Country, says owners are able to earn an average of 12,000 to 15,000 a year from their properties.