Intellectual Property - Little Venice, Summer 2015
Fri 12 Jun 2015
Certainty restored: Whats next for the London property market?
Now that the dust has settled on the outcome of the General Election, we believe home-owners in London can heave a sigh of relief, confident in the knowledge that the onerous policies of mansion tax and rent controls are off the agenda.
The unexpected Conservative majority does not mean it will be a universally smooth ride for the market. I fully expect the new Government to raise new taxes on expensive property, probably via increased council tax bandings. In reality, this may be difficult to implement so it will be interesting to see how this is proposed. Either way, my view is that property taxes will increase in the coming years. Whilst this cannot be seen as good news for the market, it will do little to dim the attraction of London as a world class place to both live and to do business, and the confidence engendered by a pro-business government will continue to draw in capital and talent from all corners of the globe. We should applaud this as London is, and will continue to be, a huge driver of the economy for UK PLC and we should interfere with it at our peril!
So, what does this mean for property prices? Central London, by definition does not have huge swathes of building land, therefore it seems obvious to me that prices in London will continue to rise. Central London has never been affordable for most people and were kidding ourselves if we think it ever will be. However, the rise in value in Central London has had the ripple effect of allowing developers and builders to look further afield and build high quality property in areas ever further out and I believe prices in adjacent suburbs will continue to increase at pace. Areas where the communications are good and there is a supply of good quality, attractive period properties, will appreciate the fastest and will also appeal to buy-to-let investors. Buyers will however, be prepared to pay top dollar for properties in outer-prime parts of London. Its a fact of geography that however much we try, supply in London will always be limited and with that in mind, prices will continue to rise.
Peter Rollings,Chief Executive
Local Sales Market Update
The sun is once again shining, the flowers have bloomed and the traditionally busy spring London property market has arrived. Currently, we have a very healthy nine buyers registered for every property for sale, which is in stark contrast to this time last year, when property was in short supply, buyers were chomping at the bit and house prices were going through the roof. At its peak, in April 2014, we had a staggering 21 buyers registered for every property on the market!
Since then, competition from buyers has eased and more property is coming onto the market, with sellers more confident that theyll find the right property for their onward purchase. From an estate agents point of view, the market conditions now, lend themselves to much smoother transactions, and our clients are enjoying some great results.
Being well known for its large Victorian and Edwardian mansion blocks, lateral living continues to be the popular choice for those seeking a Maida Vale home. There are two types of mansions blocks in the area: the first are the more imposing, larger blocks on main Maida Vale roads, often popular with international buyers from areas such as the Middle East, Russian and Asia. These buyers place importance on the security and services of porters and private lifts, and are happy to pay a premium for these benefits. The second type consists of smaller, more individual mansions blocks located further into Maida Vale, without such services and charges. These remain a more popular choice with local buyers including first-time buyers and domestic buy-to-let investors. Interestingly, were also seeing a rise in The Bank of Mum & Dad, as cash buyers look to purchase sound investments for their children. To the north of the area, towards St Johns Wood, we are seeing the traditional influx of American families wanting to be close to the local American school. Apartments in this pocket of North West London often have access to large, private communal gardens and will attract wealthy, young families wanting a sense of community and safety for their children.
To the west in South Kilburn, the regeneration programme is currently in its second phase. With a new residential quarter of mansion terraces, private communal gardens, a new civic square and pedestrian boulevard on Kilburn Park Road, I believe this much needed investment will change the face of Maida Hill and West Kilburn drastically. As such, if I were to choose a hot spot, it would here, where lovely one- and two-bedroom flats are readily available between 300,000 - 700,000.
These properties are moving fast, and often for full asking price and above. Indeed, in the last month alone, we coordinated several sealed bids and sold three properties in Maida Hill for more than the asking price.
Currently, the market is strongest in the £500,000 to £750,000 price bracket, with particularly strong interest for one- and two-bedroom flats. In the first half of this year, we did see demand for mansion flats priced over £1,000,000 ease however, post-election, we are once again seeing this pick up and will undoubtedly see this trend of popularity continue into the remainder of 2015. Looking ahead for the rest of the year, I believe we will continue to see a healthy volume of sellers deciding to make their next move and if the current pace continues, we could see up to 5% increase in house prices by the end of the year.
Local Lettings Market Update
Little Venice saw an influx of four- and five-bedroom lateral apartments in the larger mansion blocks, which coincided with this increase in tenant demand. Indeed, we were instructed to let eight properties in a single portered block in St Johns Wood and they came at just the right time.
Added to this, families who would ordinarily have been looking to buy a larger family house, decided to remain in the rental market and as such, secured one- and two-year leases in these mansion blocks due to uncertainty surrounding the general election.
While local demand is prevalent, we fi nd many Americans favour Little Venice by recommendation from other ex-pat families who are also currently living in the area. Attracted by the charm, transport links, property sizes and affordability compared to other neighbouring boroughs, these families seem to have lived in the area for several years in close proximity to The American School, and want to remain close to the picturesque parks and waterways they have come to call home. Blomfield Road, Warrington Crescent, Randolph Crescent and Clifton Gardens are all prominent locations in particular demand.
Throughout the typically busier spring period, we saw two-bedroom garden flats in Maida Vale come and go quickly from tenants in search of blooming gardens and outside space. These tenants tend to be professional couples working in the city, who may have been previously living in small, high-end one-bedroom flats in Notting Hill and Kensington and are looking to relocate for more space and a garden. We recently let a two-bedroom garden flat on Edbrooke Road on the first viewing for the full asking price to a professional couple for this reason.
Evidently, more established professionals previously living in Marylebone now have their heart set on St Johns Wood and prime Little Venice, as they are still close to the Jubilee line but pay significantly less for the marginally longer commute. Within Maida Hill and Kilburn, the demographic tends to be more younger families wanting value for money.
Many of our French tenants currently work for the major French bank, BNP Paribas on Lisson Grove, just a short walk from Little Venice, Paddington and St Johns Wood. As a business, weve seen an astounding 44% increase in corporate applicants compared to the same period last year, and with London retaining its status as a global economic powerhouse for business, we can only expect this to continue.
Whilst Prime Central properties priced over £5 million have faced headwinds over the last twelve months, recent activity has been promising. In a recent four-week period, we exchanged close to 40 million worth of property in Notting Hill alone, with an average value in excess of £8 million; this points to a positive and welcome improvement in market conditions at the higher end of the market. Strong capital appreciation and a good number of transactions in outer London led to a lot of inaccurate commentary in 2014.
In reality though we saw measured capital appreciation for properties valued over £5 million in our central region, and while good premiums were achieved, careful management and profiling remains crucial. With credit markets still tight, constrictive City legislation and greater transaction costs, buyer confidence still needs to be won. This said, with the threat of a Mansion Tax lifted and Londons appeal as a global centre more certain, I believe the 12-month outlook will be positive and look forward to a good activity-inducing period of stability. While international reach is important in the sale of Prime London property, I find its equally important not to undermine the value through haphazard advertising, marketing glare and unwelcome intrusion. Often, our best results are achieved through a highly targeted approach, where discretion is preserved and potential buyers are identified through our existing network; the largest network of offices in Prime Central London. Our Prime Sales Department offers a bespoke service, where our experience and intimate understanding of the Prime London Market enables us to navigate through the difficulties that might otherwise derail transactions.
To find out more about our Prime Sales service, please feel free to contact Keith Gorny, Director of Prime Sales.
Contact Keith on:
T 020 7368 4197
The London residential development market is one of the most dynamic markets in the world. In terms of development activity, the last time the Capital witnessed such a boom in housing delivery was in the 1930s, and much of that was on greenfield land. Whilst much criticism is rightly levelled at an undeniably bureaucratic and overburdened planning system, we should not judge it too harshly.
The statistics below make for compelling reading:
1.Construction starts in Q1 2015 were double what they were in Q1 2014 and 177% up on the quarterly average for the last five years (source: Molior)
2.Total units under construction are double what they were in the previous peak in 2007
3.There are eight regeneration zones being delivered simultaneously across the capital comprising a total of 84,000 units this is an unprecedented level of development! The regeneration zones are:Vauxhall/Nine Elms, Silvertown, Brent Cross, Old Oak Common, Earls Court, Kings Cross, Greenwich Peninsula & Stratford/Olympic Park
To put this into context, since 2008 Londons population has increased by 600,000 to a level of 8.6m. By 2020 it is forecast to be 9m and by 2031 it is predicted to breach the 10m barrier. From a supply perspective, it is well know that London faces a chronic under-supply of housing. What is perhaps less well known is what it will take to remedy this scenario. According to research undertaken for the Mayors Office, London needs to see twice the current increase in house building levels to deliver 42,000 new homes a year until 2035. That is the equivalent of 50% of the combined total units being provided across Londons eight regeneration zones in a single year for 20 years!
Outside of a dramatic overhaul of our planning system and a streamlining of the manner in which development land (and specifically land held in the public sector) is brought forward for development, it is hard to see the demand / supply imbalance being corrected any time soon. All of which means that despite the inevitable ups and downs of a cyclical market, the long term projection for house prices and rents remains upward and it is hard to argue against the consensus forecast of 25% growth in London house prices over the next five years. What is certain however, is that there has never been a more dynamic or exciting time to invest in the London residential development market, given the truly world class supply of cutting edge residential developments on offer.
T 020 7368 4831