The 2019 London property market is set to be a year of two halves: before and after Brexit.
Estate agents in the capital are predicting a muted first quarter as buyers and sellers sit tight, cautious of making a huge financial commitment before the March deadline.
This follows an erratic 12 months. Last year can be characterised by dramatic swings in sales month-to-month and huge variation in demand from one area to the next. For example, Notting Hill saw more activity than nearby Mayfair, while Battersea beat Chelsea.
South West London’s Nappy Valley also mirrors this pixelated image of mixed fortune with a flight back to the traditionally popular roads so it’s all about location, location, location once again.
The average property price of a luxury family home in South West London fell by 1.9% in the 12 months to December 2018 and by 5.4% over the last five years. Values in Clapham dropped 4.3% in 2018 but rose 2% in Battersea, according to one national estate agent.
Rather than blame Brexit for the recent house market woes, Austin Thorogood, Director of John Thorogood, says the house price slide was triggered when George Osborne upped the stamp duty rate in 2014. “We’ve witnessed the downward tilt since then,” he says.
In the mainstream market the average property price in Lambeth has reached £488,644. Homes in Wandsworth sit at £646,874, over £100,000 more than the equivalent property in Merton (£512,329).
BREXIT: THE SILVER LINING?
Demand for family homes in Nappy Valley is driven by necessity to move. Birth and death, marriage and divorce, education and retirement still power the market in this part of London.
he backdrop of Brexit uncertainty, in combination with punitive stamp duty rates, has dampened demand. However, the price fall has opened up the market to more British buyers, says Patrick Rampton, founder of Rampton Baseley.
“Prices have come down 10% in some cases, tempting British buyers who are looking for that forever family home,” he says. “People are buying and selling here because it’s a great place for young families to live. Only transactions of familial necessity have kept the market ticking over.”
First-time buyers tapping into the bank of Mum and Dad have also been an important player. “Those first-time buyers who could get finance and scrape the deposit together have been able to take advantage of the fall in prices and secure a good deal,” adds Vatche Cherchian of Portico.
However, it’s a complex market place in the house sale market. While price falls have enabled some buyers to afford a bigger home, transaction levels have fallen.
Many young families are saving for longer and making the jump from flat to big house and skipping a couple of rungs of the ladder because of stamp duty and high moving costs, Rampton explains.
Charlie Streatfield of Marsh & Parsons agrees that the fall in the number of people willing to “get over the line” made for a tough 2018. “The busiest price bracket was young buyers with parental support buying two-to three-bedroom flats around Northcote Road and St John’s Hill for between £500,000 and £1 million.
REGENERATION AND TRANSPORT DRIVES SALES
Optimism abounds in South West London as the area is home to some of London’s most sprawling regeneration schemes. Lambeth is now seen as a borough of choice for commuters. The transformation of Vauxhall, Nine Elms and Battersea Power Station will result in 1,800 new homes (to be delivered by 2030) along with two new underground stations and 50 acres of public space. Such area improvements will also push up the average house price.In a dowdy part of Wimbledon the developer Galliard is creating new homes and a new home for football club Wimbledon AFC.
The League One team was born in 2002 when the original club, Wimbledon FC, fell into financial difficulty and moved to Milton Keynes, morphing into MK Dons. Now AFC Wimbledon is moving out of its shared ground in Kingston, back to its Merton heartland and into a new complex comprising a 10,000-seat stadium, squash club, gym and 604 new homes – prices start from £440,000.
“OPTIMISM ABOUNDS IN SOUTH WEST LONDON AS THE AREA IS HOME TO SOME OF LONDON’S MOST SPRAWLING REGENERATION SCHEMES”
HOTSPOTS AND BLACKSPOTS
“In a difficult market buyers will opt for safety,” says Rampton – who reported a record year for Rampton Baseley. “We’ve won a greater market share as buyers turn to traditional high street agents with local knowledge over online disruptors,” he claims. Buyers are applying a similar strategy when it comes to location, says Portico’s Cherchian. The best roads are still sought after: Honeywell Road – within the tight catchment area for Honeywell Infant and Junior School – Bellevue Road which runs parallel to Wandsworth Common, and Nightingale Lane with Clapham Common at the top.
He also cites Grafton Square (Clapham Old Town), the Heaver Estate in Tooting Bec and the Toastrack. “Big family homes come up so infrequently on these roads that there are always buyers waiting to pounce. That will continue,” says Cherchian. Austin Thorogood is of the opinion that while some prices may be down by 10%, others have held firm.
“If you’ve got a house on the best road between the Commons and it stands out because it’s wider than usual or has a 50-foot garden, for example, then that will command a higher price than a bog standard house.“We had an unmodernised house on the market, on Wakehurst Road, that was unusually wide, and had 40 viewings and eight offers and that demonstrates my point.”
During the frenetic surge of activity following the global financial crisis a decade ago intrepid buyers broadened their search. Driven by the desire to find value for money and more space the outlying areas of Nappy Valley such as Streatham and Tooting Broadway became firmly established on the property radar.
“This wave of demand has slowed,” says Cherchian. “There is now a question mark over whether buying in the up and coming areas is the right investment in uncertain times.”
THE RURAL EXODUS SLOWS
In 2014 the price of the average property in London shot up as much as 20% in a year. Conversely, the rural market was enduring a sluggish recovery. This prompted homeowners in the capital to cash in their London homes and buy the forever country home. As house price growth has slowed in the capital this trend has abated.
Nonetheless, there is always some movement out as families go in search of big back gardens. Those who do move head down the A3 corridor towards Guildford and to Kent – which is more affordable than Surrey.
New research from the online estate agent Yopa shows that Walton-on-Thames, Twickenham, Kingston and Surbiton are also popular destinations for former Nappy Valley homeowners.
TIPS TO KEEP BUILDING COSTS DOWN
• Use a project manager
• Do the essay plan before the essay – get proper plans and a detailed specification
• Try and get your neighbours to consent to the works rather than getting a Party Wall Award. Sometimes they are necessary, but for basic building work it is an added cost that can be avoided
• Kitchens – don’t blow the budget on carcasses and doors. Spend the money you save on really good work surfaces and appliances
• Rather than bespoke roof lights and glazing buy Velux solar powered opening with rain sensors• For bi-folding doors look to online companies – make sure the measurements are absolutely right but you can save a lot against standard suppliers
• Hold on to a decent completion payment and retention to make sure the snagging gets done to your satisfaction
• Use a project manager – did I mention that already!
Source: Good London Builders
RELOCATE TO RENTING
The UK housing market is undergoing a fundamental structural shift as renting becomes more commonplace. Political and economic uncertainty means many prospective homeowners are holding off from committing to buy. This, plus a 16% cent rise in our wages between now and 2023, high house prices and stamp duty, will encourage more people to rent.
Wannabe buyers have become tenants and prospective vendors are now landlords. Brexit has aided this shift, particularly for European tenants as they are unsure of whether their job will be relocated to Dublin, Madrid or Frankfurt so have decided to stay put in lettings rather than buy.
Furthermore, big corporates have flown in experts to help them work out contingency plans after Brexit which has fuelled the executive relocation rental market.
The inevitable band of homeowners deciding to improve and not move is also generating new rental tenants as families move into rented accommodation for a year or more as they gut their homes.
STAYING PUT IS A POPULAR CHOICE. “THEY’RE IMPROVING RATHER THAN MOVING,” SAYS STEVE CARTER, PROPRIETOR OF SUNDIAL PROPERTY
THE MISSING MOVERS
The link between Brexit and the home improvements market is clear, according to Rory Gordon of Good London Builders. “The house buying market has definitely seen a slowdown in activity as well as a fall in value,” he says. “This is countrywide but the value loss has seen a significant increase in London. As a result, enquiries for doing work have been strong as people – dubbed the missing movers – expand their home rather than trade up.
“Basements are still popular in South West London with stamp duty deterring clients from moving and with a lot of people having developed as much above ground as they can,” he adds.
Staying put is a popular choice. “They’re improving rather than moving,” says Steve Carter, proprietor of Sundial Property Services. It’s a view shared by Kenelm Cornwall-Legh, director of Run Projects, who believes people have sat back and watched events unfold – and in particular movements in property values – since the Brexit referendum two years ago. “They’ve factored in the Brexit effect and are now saying, ‘Let’s get on with it,’ although they are more cautious and taking longer to commit,” he says.
Miroslav Chrapka, proprietor of Kelmscott, concurs. “They’re repairing what they have, possibly because they want a long-term fix as they’re staying and not moving,” he says. And it’s easy to see why. Research from the online architect SoResi reveals that in London an attic conversion adds £208,000 to the value of a property and a kitchen side return adds £124,000. However, Gordon believes as prices have fallen so ends the era of adding square footage to the home simply to increase the value of the property. “Extending is now driven by the need for more space,” he adds. According to the Council of Mortgage Lenders, bathrooms followed by kitchens were the most popular renovations in 2018 but Gordon is also seeing an increase in demand for garden pods and backyard studios, creating extra bedrooms or office space.
TOP TIPS TO TURN A BUILDING PROJECT FROM A COMPLICATED PROCESS INTO AN EXCITING PROSPECT
• Allow enough time for the design and planning phase. This will allow you to minimise the risks involved and maximise productivity and results
• Carefully think through the potential project risks so that you’re prepared, financially and emotionally
• Undertake a competitive tender to get best value, make sure you compare prices on a like for like basis
• Consider what is essential, what is negotiable, and what is optional, so you can adapt to project costs with quick, informed decisions
• Work to an agreed programme for client supplied items so you don’t hold up the build, a cause of delays and additional costs
• Collaborate, work as a team. It’s not them and us
• Enjoy the process, and ultimately the end result!
Source: Run Projects
2019: WHAT’S IN STORE?
The majority of home buyers are not concerned with the intricate detail of a deal. Even a semblance of an agreement will inject confidence and release some pent-up demand in the market.
Marsh & Parsons’ Streatfield doesn’t believe buyers will return in a hurry in the first half of the year but hopes an orderly Brexit will lead to a busier autumn.
While renting was the saviour of the property market for estate agents last year, industry observers fear an exodus of Europeans renting as Britain leaves the EU. Rental homes could flood the market in that event, which would reduce rents and put pressure on landlords.
“The future is uncertain at this time. Uncertain and possibly bleak,” says Rampton. “Everyone has hunkered down with the proverbial tin of beans, duvet and shotgun, awaiting the many-headed monster called Brexit Proper in March.”
MOVING VERSUS EXTENDING – THE PROS AND CONS
Costs, Budget and Funds For a move consider stamp duty, estate agents and legal fees, removal costs and work required. To extend think construction costs, professionals and planning fees, and the fit out. Work out the best way to fund it – cash savings, borrowing or remortgage? Don’t forget VAT at 20%.
Lifestyle Factor in family, school catchment areas, work security, transport and commuting and think up to ten years ahead.
Property Market Ask estate agents to quote on your property’s saleability and value, now and if extended.
Practicalities What space is there to extend – garden/side return/loft/basement and what planning or conservation restrictions are there. With extending, think about balance of bed, bath, reception and size of garden ratios.
Time and Effort Moving is stressful, but can you cope with the disruption of building work? You will need time for decision making, managing and sourcing too.
Finally To find or create your perfect home in the perfect area at the perfect price research options, analyse costs and know where to compromise.
Source: Clara Bee