Taking stock of the 2013 London property market
Thu 05 Dec 2013
As 2014 draws nearer, now seems like a good time to take stock of the 2013 London property market. Its fair to say that since January, the market has performed exceptionally well across all areas of London; indeed those of you who are regular readers of my blog will have learned about some of the remarkable stories weve encountered!Growing confidence in the market, more accessible mortgage products and government initiatives such as the Help-to-Buy scheme, have all helped to revitalise the housing market. And its not just London thats benefiting. According to the Office of National Statistics September Price Index, UK house prices are up 3.8% year-on-year, with the Council of Mortgage Lenders Q3 2013 statistics revealing that mortgage lending is at its highest since 2007. So, from this synopsis of the market, youd think everything was rosy... Well almost but not quite. Its clear that the UK property market is making a strong recovery, with London head and shoulders above the rest, but there are still some obstacles standing in the way.
A chronic shortage of stock continues to be the biggest problem facing not only buyers, but also home-movers. In order for a healthy, balanced property market to function, all sections of the market need to be moving. The property market needs not only first time buyers and home movers, but trading uppers and trading downers.
The Help-to-Buy Scheme has undoubtedly aided first time buyers, giving them the confidence, belief and the ability to not automatically become part of generation rent. At the bottom of the chain, they allow first time seller and therefore second time buyers to sell and progress, creating a chain reaction in the market. This is all very well in theory, however what we are experiencing at the coalface, is that when it comes to home-movers, they are faced with a chicken and egg situation dilemma: Worried about not being able to find the right property, sellers are not marketing their own properties before they find, which in turn makes them unattractive when they are competing against chain-free buyers. On the flip side, there are people who sell before theyve found and are exposed to the risk of losing their buyers if they dont find quickly. In London especially, this vicious circle is holding back a large proportion of stock from the market people arent selling because.people arent selling.
That said, across our network of 19 offices, were seeing an increasing amount of savvy home-movers selling and then renting a property for periods from a few months to two years. In some cases, this is to make themselves more attractive as chain free buyers when competing in what is a fiercely competitive market. But for many moving within London, it gives them an opportunity to try out an area before they buy. Having the opportunity to live in an area before committing to, what is for most people, the most expensive purchase of their lives, can be a shrewd move.
Indeed, with such a shortage of stock in prime central London (our Pimlico & Westminster office currently has 41 buyers registered for every available property for sale 38% more than this time last year), its no surprise that buyers are looking further out, which in turn has seen some of these non-prime areas significantly outpace prime central areas when looking at price growth. For example, our own research shows the following average increases for the year to October: Battersea 12%, Balham 17%, Clapham 17% and Fulham 15%, compared with Chelsea 5% and Holland Park 8%. This clearly illustrates the shift of wealthier buyers moving into neighbouring areas; they have deeper pockets and appreciate the increased value achieved in non central areas.
Currently the market is busier than usual for this time of year. Sentiment is positive, which leaves me in no doubt that 2014 will be another exceptional year for the London property market.