Intellectual Property - Brook Green, Askew Road, Shepherds Bush & Brackenbury, Summer 2015
Mon 22 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!
"We should applaud this as London is, and will continue to be, a huge driver of the economy for UK PLC
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
Confidence has returned to the market and seemingly so have the buyers. The supply and demand ratio peaked in March last year for our Brook Green and Askew Road offices, with a staggering 40 buyers registered for every available property, and prices were rising at an extraordinary rate. Conversely, in the second half of 2014, there was a complete shift and the number of active buyers in the market eased significantly.
Since the beginning of this year however, we have seen a much healthier level of demand for property in this area, with an increase of 14% for the 2nd quarter, compared the first quarter of the year and up 23% from the end of last year. With buyer registrations and available properties both rising, the current ratio of buyers for every property now stands at a stable and promising 16.
Period property is always highly sought after across all areas of the market; from one- and two- bedroom apartments, to larger Victorian and Edwardian-style family homes. The area is blessed with a good house market so there is plenty of choice for family buyers and pockets such as Brackenbury Village, Brook Green and Wendell Park are particularly popular. Such beautiful period property coupled with great local schools, parks, and a real sense of local community, makes the area ideal for families looking to establish themselves for the long-term and many of the buyers that we are registering are migrating from more central areas such as Holland Park and Notting Hill.
However, its the demand for flats that continues to be the most prevalent sector of the market, and buyers with budgets under the 1,000,000 threshold are predominantly either first-time buyers, notably professional couples, or buy-to-let investors. Apartments with the added benefit of outdoor space are often sold following multiple competing offers.
Brook Green and Askew Village remain hotspots for both investors and end-users alike, in what is considered an established, stable location to put your money. Indeed, we have seen a shift in investors who have traditionally purchased in Prime Central London areas such as Kensington and South Kensington, who are now moving over to W12 and W14, where stronger yields are on offer.
Post election, new-buyer enquiries are already increasing and whilst mortgage rates are so low, we expect this demand to continue rising throughout the remainder of the year. There has been major regeneration and expansion of Shepherds Bush near the Westfield Shopping Centre, The Dorset Hotel and the redevelopment of Shepherds Bush market on the east side of the railway viaduct, between Uxbridge Roadd and Goldhawk Road. The revamp of these 100-year-old markets and 200 new apartments all contribute to the attraction from new residents and buy-to-let investors.
Local Lettings Market Update
The start of 2015 brought a typical flurry of tenants seeking a change in the new year, and we have seen demand increase across all areas of the market consistently since then. The varied and steady flow of available properties, and an equally measured number of tenants, has meant that the tenant-demand ratio has remained steady with an average seven tenants registered for every available property throughout the first half of the year.
As to be expected during the Spring season, when the sun once again began to shine and the flowers bloomed, we saw garden flats and houses with outside space in high demand. Similarly to purchasers, more and more families are spilling into Brook Green, Brackenbury and Askew Village from the higher priced areas of more central, neighbouring parts of London such as Holland Park and North Kensington. These tenants are very often renting here, before purchasing, and as such, larger family homes at around 4,000 per month are currently highly sought-after; especially in Brook Green.
While demand for larger homes with gardens remains steady, the most popular properties are two-bedroom garden flats. These properties are generally attracting a premium price and are quick to rent - even more so than in 2014. The most active tenant profile for these flats tends to be professional couples and singles and at the close of the financial year we saw an increase in the number of corporate tenants seeking property, from companies based primarily in Hammersmith and Chiswick Park, many of whom are relocating to London with their employer, either from abroad or from outside of London.
Hammersmith especially is becoming a hub of corporate activity with some major global businesses relocating their UK headquarters to the Broadway, to benefit from easy access to Heathrow as well as good routes into the City. Indeed, weve seen an astounding 44% increase in corporate tenants compared to the same period last year, and expect this to continue as London remains a global economic powerhouse for business. In our experience, these corporate tenants tend to be the most favourable as they invariably have excellent budgets, and spend very little time in the property, so minimising wear and tear.
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