Blogs, Press & Media

On the Market - Kensington, Chelsea & Earls Court, Autumn 2012

Thu 20 Sep 2012

 

 

The autumn property market always encourages a flurry of new instructions and a plethora of enthusiastic buyers. Liza-Jane Kelly gives her advice on making the most of this window of opportunity.

The summer months always present a slowdown in the market and 2012 was no exception. The first quarter of the year saw record-breaking price increases in Kensington, Chelsea and Earls Court a result of the continued uncertainty in the eurozone coupled with the imbalance of supply and demand. Added in to the mix this year were the Diamond Jubilee and Olympic games which, in some transactions, acted as a catalyst for both buyers and sellers keen to seal the deal before the summer celebrations started.
This was refl ected in the number of buyers per property reducing from 19.6 in Q2 this year to 15.7 in Q3. However, whilst the distraction of the Olympics took its toll on speculative buyer demand, sales activity during the fi rst two weeks of August actually increased by 23% compared to the same period last year and 35% higher than that of 2010. Despite a decrease in buyer registrations of almost 30%, those buyers actively looking, wanted to take full advantage of a less competitive time of year compared to the busy autumn.

Also, key to selling was sensible pricing. Serious buyers are generally in tune with the market, specifically with the values of properties in their areas of choice. Similar to Michelin star restaurants, the best properties continue to achieve top prices, however those that dont tick all the boxes have to be priced competitively to even get speculative buyers through the door. There is a fine and constantly changing line between optimistic and unrealistic pricing,making it imperative to market a property at the true market value rather than a value designed to fl atter the seller; if the latter approach is adopted, any chance of achieving the best price is likely doomed.

Earls Court continues to blossom. With its fantastic transport links into the city and out to Heathrow and the west, it is seen as an attractive alternative to its neighbours. Here you can buy a stucco fronted townhouse or apartment overlooking a garden square for substantially less than in many other parts of Kensington and Chelsea. The Earls Court redevelopment project has also excited investors and buyers alike, who quite rightly recognise that capital appreciation of property in the area as an asset class, is likely to be accelerated as a result of the Earls Court re-generation over the long term. As we move into mid autumn, it is clear that those buyers who took time out to enjoy the summer are back in force;new buyer registrations are up too. Smart sellers know this and have been quick off the mark. They know that if they want to sell their property before Christmas they need to act now. In reality, there is just three months prime selling time left. Every year, as soon as December 1st arrives everyone starts to wind down, including solicitors and the banks. Looking ahead we expect the market to remain strong over the coming months in the run up to Christmas. Despite a healthy increase in new buyer registrations, we are also seeing an increase in valuations of stock and instructions, which is likely to keep the market in Kensington, Chelsea and Earls Court in check. I expect a marginal increase in prices as buyers compete to snap up their dream property before 2013.

If you'd like further insight, contact Sales Director ljkelly@marshandparsons.co.uk


adam stackhouse head of developments investments

Adam Stackhouse gives further insight into the buy-to-let market proving that this asset class remains a key priority for investors

The residential property sector offers a robust, steady asset class, that delivers or even exceeds our expectations in the medium to long term. There has been a notable resurgence in the buy-to-let market despite a pronounced shortage of competitive mortgage products and a harder qualifi cation process for buyers. Surprisingly however, and with little warning, this area of the mortgage market has recently improved, with a far greater number of products now available. Surely a sign that confi dence is returning to the banking sector.

We have also seen an increase in the number of UK based, cash purchasers entering the market. The over 50s age bracket have reacted steadily to the continued decline in pension performance and have re-directed some of their personal wealth into London property. We have all heard of the Bank of Mum & Dad helping their offspring with a house deposit, but this new breed of investor is somewhat different. Historically, they have been patient with their traditional asset classes, namely stocks and shares, yet rewarded with very little growth in real terms. Logically then, they are seeking opportunities that deliver both regular, annual income, alongside the potential for attractive capital growth. Indeed, 34% of new homes purchases this year were buy-to-let investments.

So what types of properties are these individuals targeting? For once, it is not the high-end luxury schemes, popular with overseas investors and homeowners, and the reason for this is quite simply that many UK purchasers have been squeezed
out. High net-worth, foreign buyers have acquired almost half of all newly-built property in prime Central London, where there is great tenant demand and a much stronger potential for capital growth. The over 50s however are choosing the more boutiquey developments to invest their money. These style of properties are less about the lifestyle (they arent going to live in them after all) with no leisure facilities for example. Instead, its more about good quality property that will attract the best tenants, for the best rents. They typically live outside of London but more than likely, have previously owned a property in the capital, so have first-hand experience of the capital growth that can be enjoyed.They want to keep a finger in the London property market pie whilst also benefi ting from a healthy rental yield.

As with any property investments, we find that much of the success is down to timing. As this rapid expansion of Prime Central London continues, we are fi nding that intelligent, time-rich, UK domicile investors are intuitively spotting areas for future growth. They are targeting areas with renewed or extended transport links, local authority investment in quality open spaces and the value of properties in adjacent postcodes. All of these factors, if carefully analysed, reveal that savvy buy-to-let investors are still out in force, perhaps just a little smarter with their choices as they target investment performance over glamorous postcodes.

If you'd like further insight, contact Adam Stackhouse Head of Developments,Investments & New Homes astackhouse@marshandparsons.co.uk

 


patrick littlemore lettings director marsh and parsons

The Olympics have come and gone, but its effect on the rental property market continues into the autumn.
By Patrick Littlemore

The start of the autumn is traditionally the busiest period for the lettings market with an influx of graduates and relocatees, combined with the renewal of existing contracts and the transfer of tenants from one property to another. The shortage of stock seen in the sales market is in stark contrast to that of the lettings market in Kensington, Chelsea and Earls Court, where supply and demand are on a fairly even keel. This has led to a stabilising of prices which, we believe will continue into the remainder of the year.

In the last four weeks, we have renewed 45% more tenancies compared to the same period last year a sign that tenants are deciding to remain in their existing accommodation for longer.
The uncertainty in the eurozone has continued to see foreign investors identifying the London property market as an appealing and relatively safe place to invest their money. Once secured, investors immediately let their property through us in some cases before the sale has completed (although after exchange and with the sellers approval), to ensure minimal void periods.

So whilst there is now an improved selection of property for rent, the same can also be said for the large number of great quality tenants registered with our Kensington, Chelsea and Earls Court offices. Would-be buyers who are priced out of the sales market, are deciding to rent, rather than move out of the Kensington & Chelsea area. Additionally, we work with a number of London based international companies via our Corporate & Relocation Services department, many of who placed a three-month embargo on London relocations in anticipation of high rental hikes and challenging moving conditions during the Olympics. Now the embargo is lifted, we have seen a significant increase in the number of search requests coming from relocation agents in the capital, looking to secure property on behalf of excellent corporate tenants. So, with comparatively more property and fewer tenants, its no surprise that rental prices have stabilised. Landlords can now expect an average increase of 2.5% on a renewed contract; a figure lower than the rental increases achieved earlier this year, but when you consider the 15-20%, on average rental rises in the last two years, its still a great time to be a landlord.

Looking ahead, the Kensington, Chelsea and Earls Court lettings market is likely to remain strong, ever popular with investors offering yields of between 4% and 5% combined with fantastic capital appreciation (9.6% in the last year). Whereas earlierthis year, there was a stark shortage of property to let and vast tenant demand, there is now a much more healthy balance of both property and tenants. I expect this to continue into the autumn market, with price increases to be more in line with RPI.

If you'd like further insight, contact Director of Lettings plittlemore@marshandparsons.co.uk

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