Market Review - Kensington, Chelsea & Pimlico, Autumn 2008
Thu 27 Nov 2008
The value of experience
By Liza-Jane Kelly, Sales Director
I think that its fair to say that this is the toughest property market that anyone has seen for a very long time. There are not too many property professionals in the business now who were around in the
early 70s when I am told it was just as tough and none of those that are still in the industry had senior, managerial roles at the time. The key is how to react.
Some agents have evidently decided that it is important to be extremely downbeat with buyers and sellers alike and to tell all who will listen that it is a terrible time to buy or sell and that they would do better to come back next year (they dont use exactly these words however their attitude, demeanour and body language shout it). Others have decided that all is rosy in the garden and are still tempting their poor, unsuspecting clients with last years prices and then working the price down to a more acceptable level in a few months.
At Marsh & Parsons we try to find a happy medium between these two stances. Our mission remains to achieve the highest possible price for our clients. However we do, as gently as possible, try and bring our clients expectations in line with the realities of the current market. I think we have the balance just right and our professional, well trained staff (even more crucial inthe current market) are able to tread the line between being too afraid of giving pertinent feedback and advice and too impatient to just get the property sold. It is one of the great skills of the job and good agents should be adept at it.
I am pleased to say that there are still many bright spots in the current market, not least of which is our lettings and property management departments who seem to break records every week with the business they are transacting. However, what gives me huge pleasure is when I get a particularly satisfied client who writes me an email that ticks all the boxes for what I want Marsh & Parsons to be renowned for.
Just such a letter arrived on my desk this week and without, I hope, sounding too pleased with ourselves here it is:
Just a quick email to say a huge thank you to you both, and indeed all the negotiators at M&P. I know how hard the whole team has worked right from the day I appointed M&P. The level of viewings has been outstanding and the enthusiasm and professionalism from everyone has been evident. (The buyers building surveyor even commented on how accommodating and friendly you were). To have achieved such a great price, in such a short timescale in this difficult economic climate is incredible. I have no idea where you found the buyers, I am still pinching myself to check if this whole thing is real! Anyway, thank you so much for all your hard work and experienced negotiations in this.
Now: The Autumn Market
By Peter Rollings, Managing Director
Throughout the summer and into the autumn, the media have continued their reporting of the statistics produced by The Nationwide and Halifax, both of whom claimed small monthly falls over the last several months that amounted to over a 10% fall in London property prices from their July 2007 peak. This however, does not accurately reflect our experience. In this more informed era of high speed communications, the majority of our clients were quick to recognise the direction of prices and sellers adjusted their prices rapidly and sharply (in some instances by as much as 20% from the peak) in order to sell. This was a pill made easier to swallow by the fact that sellers who were also buyers had greater opportunity to negotiate on related purchases.
There is no denying that confidence has been knocked with the realisation that in The New Age of elaborate securitised debt, house prices can go down as well as up. The globalisation that provided a decade of low inflation, which in turn permitted low interest rates that underpinned strong economic growth and rapid asset appreciation with an accompanying, flourishing financial sector, appears to have had a sting in its tail. While the lack of availability of finance has been the single biggest shock to the housing market, in our equity-rich environment job security in the closely linked finance sector has been the bigger contributor to what is now a subdued market, waiting to see where the next bit of bad news is going to come from.
In these somewhat gloomy times I see some sort of light at the end of the tunnel - while many buyers are holding back in the hope of further falls and greater choice, a significant element are getting on with their lives and are in the market buying at what appears to be good value. The bankruptcy of Lehman Brothers has, to some extent, stopped an emerging Autumn market from growing any further and only time will tell if we see any sort of resurgence in interest this year. However, what we do know is that the choice of housing available to people to buy is reducing and that there is a definite underlying demand from a good number of potential buyers who will become real buyers as soon as some sort of confidence returns to the market. This coupled with the recent co-ordinated moves on interest rates by the Worlds central banks has at last delivered a message that our government is determined to take decisive action to repair the damage so delivering confidence to the market. In our view, when the market starts moving again, the movement will be a rapid one.
Lettings: Success in a competitive market
Emilie Dawes, Lettings Director
The summer months saw the number of properties on the market for lettings reach an unprecedented high. Many people trying to sell their homes earlier this year have been unable to achieve their desired prices, so have decided to market their property for lettings instead. This has lead to a dramatic increase in available property to let in August 2007 we had a register of around 360 properties in our Kensington & Chelsea and Westminster offices. During the same period this year we had a register of 618 properties a 72% increase. Whilst tenant demand always experiences a seasonal peak (June to October being traditionally the busiest months), the volume of property on the market continues to exceed demand, softening prices as the level of competition between landlords drives rents down by, on average, 5-20%. The beginning of October has seen a predictable slow down in corporate relocation requirements due to the uncertainty in the global economy, thus exacerbating the existing problem of over-supply and as such, those tenants who are moving have an increased number of options and have become correspondingly demanding with high expectations in terms of condition.
However, landlords should not perceive the softening prices to be all doom and gloom! Despite the intense competition between landlords, the overall volume of properties being successfully let has increased by 48%. Our success in this exceptionally competitive market can be attributed to the exposure the properties receive when marketed by Marsh & Parsons. With such a competitive market for landlords, attracting and securing tenants is only achieved by effective marketing by an agent with a strong brand and proactive staff. Access to the right tenants is crucial and at Marsh & Parsons our Corporate Services Department ensures our landlords have exposure to the best tenants.
Interestingly, many relocation agents with whom we work closely are reporting an increase of new clients relocating staff to London, all of whom will register their property searches with Corporate Services. In particular, the top end of the market conditions are remarkably positive. The volume of properties let above 2,000 per week is up by 40% on last year, indicating that there are still a very healthy number of applicants moving to or returning to London willing to pay premium rents. A proportion of this may be attributed to highly-paid financial specialists being brought in to manage the crisis affecting many City firms. At the other end, we are still seeing an excellent number of prospective tenants looking for one or two bedroom properties under 500 per week many of these are would-be first-time buyers who are unable to secure the necessary financing to purchase.
Interestingly, many of the larger firms with whom we have links for their graduate relocation programmes have told us their graduate intake has only been fractionally reduced this year, despite press reports. We have already housed a large number of new hires from the big four in professional services, as well as top law firms whose graduates return to us every year. Smart landlords now increasingly realise that young professional and graduate sharers make excellent tenants in such a competitive market particularly as their busy work schedules usually mean low wear and tear on the property. The market ahead looks unquestionably positive. Although the seasonal peak in the number of prospective tenants registering to look for property took place in August and September, levels in October and November should remain reasonably buoyant. With the surge in stock onto the market also gradually slowing down, the oversupply of property will slowly be balanced out as competition between tenants builds. As such, we predict that prices will gradually begin to strengthen at every level.
Marsh & Parsons: Notice Board
Marsh & Parsons had a fun packed summer this year supporting all sorts of local events. In particular, we were the sponsor of the St Mary Abbots Church Summer Fete at the Vicarage Garden and Hall. The day attracted over five hundred people with lots of varied stalls and in particular the children's zone with our very own face painter. Despite the wet weather that day, the total raised was in excess of 6,500.