Press Release: Queue for London property grows by a quarter
Wed 10 Feb 2016
- Number of new buyers registering in January up 24% year-on-year in Prime London
- Volume of agreed tenancies in Prime London up 44% from January 2015
- Surge in demand centred on one-bed homes, which saw the highest rise in rents and house prices of any property type last year in London
- Influx of first-time buyers means mortgage buyers now account for 66% of Prime London sales up from 49% a year ago
New buyer registrations and tenancy agreements in Prime London have soared from last January, as buyers and renters hunt for one-bedroom homes, according to estate agent Marsh & Parsons latest London Property Monitor.The number of new buyers registering in January 2016 was 24% higher than in the same month in 2015 like-for-like. Outer Prime London areas are experiencing the highest New Year demand from interested buyers, with Barnes and Bishops Park seeing among the strongest rises in the number of buyers registering locally to buy property.
However, this sudden surge in demand for Prime London properties is contrasting with a severe shortage of housing stock in the capital. The supply of homes in Prime London fell 12% year-on-year in the last three months of 2015. This has led to intense competition to own a home in the capital, with 13 buyers for every property in Prime London at the end of last year.
Peter Rollings, CEO of Marsh & Parsons, comments: The London property market has begun 2016 with a spring in its step. The New Year always tends to bring a resurgence in purchase activity, as buyers shake off the last of the Christmas holiday haze and re-focus their attention on climbing up the ladder. But the figures were currently seeing are strong even by those standards. Private buyers, landlords and other investors are rushing to secure their preferred property before the 1st April Stamp Duty hike.
In the lettings market, increased demand has led to a burst of January activity. The number of tenancies agreed in the first two weeks of 2016 was up 44% compared to the same period in January 2015 on a like-for-like basis. Prime Central London in particular enjoyed solid lettings growth, as agreed tenancies surged by 91%. The central zone is expected to see faster rental activity in 2016 than it did last year, when a slowdown in corporate lettings resulted in cooler annual rental growth of 0.6%. Meanwhile, Outer Prime London saw steadier expansion in tenancy agreements of 23% in January 2016 on a year-on-year basis.
One-bed homes leading the way in rent and price growth
One-bedroom properties are the main drivers of this strong growth in lettings activity and property demand. These smaller homes have seen the biggest rise in value of any property type in Prime London over the past year, with average prices increasing 3.1% between Q4 2014 and Q4 2015 equating to a real-term rise in value of 18,417. By contrast, average Prime London property prices saw only a 1.7% increase over the same period, across all property types.
Meanwhile, the typical rental value of one-bed lets across Prime London has risen by 6% over the course of 2015 from 392 to 415 per week compared to an average of 1.9% across all property types. Within the Prime Central area, one-bedroom lets experienced even faster growth of 7%.
Peter Rollings, CEO of Marsh & Parsons, comments: "Prime London lettings activity has seen strident start-of-year growth, especially in the Prime Central area. This can largely be accounted for by the sudden surge in corporate tenancies, after the sector experienced a somewhat flat 2015. Multinational organisations are currently engaged in a large-scale start-of-year talent hunt and so are snapping up the best places to house their brightest new recruits.
"The rise in the value of one-bed lets and purchase properties indicates supply in the Prime London housing market remains an issue, as developers are still not being sufficiently incentivised to build the homes the capital requires. But with housing already a big issue in the nascent London mayoral election campaign, the Government might be spurred to act on the supply shortage as we head deeper into 2016."
|Prime London||Prime Central London||Outer Prime London|
Mortgage buyers account for an increasing proportion of Prime London purchases
The proportion of purchases in Prime London made by mortgage buyers rose from 49% to 66% between Q4 2014 and Q4 2015. As a result, the proportion of purchases completed by cash buyers fell from 51% to 34% over the same period. Even within Prime Central London typically a hotspot for cash buyers mortgage buyers accounted for 44% of all purchases by the final quarter of 2015. This comes as cheap mortgage finance continues to be available, while interest rates are held at historic lows.
Peter Rollings, concludes: "Its great to see mortgage buyers making such a solid comeback to the Prime London market. Until recently, a combination of the areas high property prices and tough mortgage terms from lenders anxious about creating another housing bubble has meant that Prime London and Prime Central London in particular has been heavily dominated by cash buyers, traditionally mostly wealthy private buyers and buy-to-let investors.
"However, the effects of the Government schemes designed to increase liquidity in the property market such as Help to Buy have finally reached the higher end of the London property market. As a result, mortgages have become more accessible for those looking to buy in Outer Prime and Prime Central London, but who dont have the capital to fund the whole purchase themselves, such as aspirational families and young professionals."
For further detailed analysis on Prime London house prices, lettings, price per square foot, investors and UK buyers, the Marsh & Parsons Q4 2015 London Property Monitor is attached.
Peter Rollings, CEO at Marsh & Parsons, is available for interview to discuss the findings. Please contact Emily Barnes on 020 7247 1403 to arrange a media interview.
The Prime Market Monitor uses a repeat valuation methodology that tracks values in a robust mix-adjusted basket of properties across all Prime London in the main areas in which Marsh & Parsons operates. Prime Central London comprises representative baskets of properties covering Chelsea, Kensington, Notting Hill, Holland Park, Pimlico and Earls Court and South Kensington. Outer Prime London comprises outer areas such as Clapham, Balham, Battersea, Barnes, Little Venice, Fulham, North Kensington and Brook Green. Prime London is used to describe all these areas combined including Prime Central London and Outer Prime London.
Supply and demand statistics are based on an audit of Marsh & Parsons registrations and instructions during the quarter. Buyer profile information taken from Marsh & Parsons quarterly MI data.
For further information please contact: Instinctif Partners, Emily Barnes / Darius Meehan, 0207 427 1403 / 0207 427 1430
Marsh & Parsons, a multi-award winning estate agent, has been part of the London property scene since 1856. With 24 offices situated in prime positions across central, west and south west London, they have an intimate and extensive knowledge of the area. Marsh & Parsons services include residential sales and lettings, property management, new homes, developments & investments, professional surveying and corporate & relocation services.
Marsh & Parsons was acquired by LSL Property Services plc in November 2011, but continues to operate as a separate business, retaining its current management team.
A business that is built on energy, agility, professionalism and knowledge, Marsh & Parsons business aim is to be the agent who not only understands the local area around their offices better than any other agent, but is also at the heart of the community. They believe that Local know-how will achieve better results and make the difference for their clients.