The End Of Year Property Review

It’s been a turbulent few months with concerns about the cost of living, the energy crisis and political upheaval dominating the front pages.
We spoke to our property partners to find out how a dramatic year in domestic and global politics has influenced the local housing market.

How would you describe the property market in Nappy Valley now?

Nappy Valley, with its focal point of Northcote Road, is and has always been a desirable area of SW11. The area sits between the two large commons – Wandsworth and Clapham – and the market is still strong for houses and flats alike as supply is diminished for quality stock. Even with the rate rises we’re still seeing a lot of cash-rich buyers, who are less financially leveraged. The turnover of quality stock is slow, particularly with houses as owners typically hold them for decades. Edward McGrane, Senior Sales Manager, Marsh & Parsons

In reasonable health! We agreed an identical number of sales in September and October this year as last year. The average sale price for offers we’ve agreed is up 14%, but the reduction in wider demand informs a slight fall in sale price as a proportion of asking price. Supply of homes is high relative to demand, and vendors who sense that prices could fall next year are behaving pragmatically; accepting offers from strong buyers who are ready to transact now. Ed Lugg, Sales Director, Portico

The lettings market in Nappy Valley continues to remain strong and mirrors the wider lettings landscape where there is a massive imbalance of available property supply versus tenant demand, meaning that rental properties that do come to market are snapped up very quickly with rents remaining high. Vatche Cherchian, Lettings Director, Portico

What has been the reaction from buyers and sellers in response to the financial upheaval caused by the mini-budget?

Rightmove’s October House Price Index suggested that asking prices grew 1.9% in London between September and October. The position was reversed between October and November, with the gain wiped out entirely. Year-on-year, asking prices were up in October by 6.9%, reduced to 5.3% in November. Sentimentally, the mini-budget was poorly received by buyers and vendors, and the ensuing fiasco has cultivated a sense of caution from buyers for whom interest rates rose from around 4% to around 6% across a short period. Ed Lugg

The two weeks immediately after the mini-budget were fairly chaotic, but as we expected the dust settled fairly quickly and those that needed to move carried on with their transactions. Joel Baseley, Director, Rampton Baseley

We’re certainly seeing a lack of confidence, though buyers are still making lower offers. The attitude of sellers is typically understanding, meaning deals are still being agreed due to price compromise. Edward McGrane

What are your projections for the coming months?

The run up to Christmas is generally a quieter time for us but there are still plenty of sales that we need to get over the line before the Christmas break. Despite the uncertainty, the New Year will always bring a new wave of buyers who are needing to move for family reasons. There is nothing like a prolonged Christmas break cooped up in an inadequate property to get people in the mood for a move. Joel Baseley

Challenges faced by vendors and buyers in recent months have made for a disorientating environment. It can be hard to know exactly how a change in interest rates will impact monthly mortgage spend for purchasers, or the availability of buyers for homes coming to the market. As such, being well-organised will be central to the success of a move. Buyers must speak to a broker whose finger is on the pulse, who has access to a wide selection of lenders, and who can respond quickly should conditions change again. Vendors should ensure that they’ve completed the documentation which buyers’ solicitors will request once an offer has been accepted. Time saved ordering management packs, completing property information, as well as fixtures and contents forms could make or break a sale in the months to come. Vendors’ and buyers’ circumstances are all unique, and it will take an experienced agent to provide bespoke guidance across the coming months. Ed Lugg

I think the market will remain stagnant for the next few months whilst cost of living bites and rates continue to rise. This will stretch a lot of buyers and could even lead to a possible fall in values. Edward McGrane

Rental stock levels will remain low over the winter with less new properties coming to the market. Tenants will stay put given the soaring costs and economic climate which makes moving house just as financially challenging for tenants as it does buyers. We expect this to ease off as we enter spring where we would historically see a lot more activity on the rental market both with properties coming to market as well as tenant demand increasing. Vatche Cherchian

How are the war in Ukraine and the cost of living crisis impacting people’s attitude to buying and selling property?

Cost of living is one thing, but it is interest rates that are the main stumbling block presenting the biggest challenge for most people – the two things are connected. We were relieved to see that mortgage deals stabilised and started coming down after the change of PM. Joel Baseley

This adds to lack of confidence among both sellers and buyers, but I don’t think these two issues have changed the attitudes of the majority of buyers. Edward McGrane

The unfolding tragedy in Ukraine has touched Londoners, and we have been pleased to support efforts to provide resources to help people who have been forced from their homes. With inflation hitting 11.1% in the 12 months to October, rents in London 13.1% up across the same period, and changes to the energy price cap, buyers are less able to save than ever before. Coupled with the withdrawal of Help To Buy, first-time buyers who’d been encouraged to step onto the ladder post-lockdown are now being frozen out of the market. Ed Lugg

Are people paying more attention to EPCs (Energy Performance Certificates) given the rising cost of energy?

Absolutely – EPCs have been central to how buyers consider how to articulate an offer on a new home for a number of years but are now more sensitive to the impact of the cost of energy than before. According to Policy in Practice, a three-bedroom house with an EPC rating of D spent £1,977 per year on energy in April 2022. This will rise to £5,386 in January 2023. Ed Lugg

Yes, on the rental side as well. This is even more of a consideration for prospective tenants who have to budget for higher rental prices as well as the increased energy costs and cost of living challenges. Vatche Cherchian

They probably should be but it’s not something we have particularly noticed. Joel Baseley

With increasing climate concerns, are people actively looking for more eco-friendly homes?

There is an increased awareness of our responsibility to lead sustainable lifestyles, and we receive more enquiries for homes with EV chargers and heat recovery systems than ever before. Homeowners are beginning to adjust their approach to refurbishment and restoration to account for the environmental impact of their homes, but it’s also important to recognise the importance of basic measures, like using smart meters to monitor consumption. Ed Lugg

Given that the housing stock in our area is largely Victorian, there aren’t many ‘eco’ homes in the truer sense of the word, but I do think that many buyers see solar as a genuine benefit when buying right now. Joel Baseley

This isn’t so much of a concern of the typical Victorian flat or house buyer. The appeal and attraction lies in the character of such buildings. Edward McGrane

With increasingly hot summers, are glass box extensions as attractive as they once were?

The council has been reluctant to give planning for side extensions that are entirely made of glass for some time, and I do think that some buyers will be wary of a fully glazed extension. We are coming across more homes that are fitted with air conditioning, often in the kitchen and in the top floor bedrooms. Buyers see this as a real selling point. Joel Baseley

We don’t see their appeal waning; glorious hot summers are a great excuse to keep the bifold doors open longer! Ed Lugg

Are people still prioritising outdoor space as they did once the market reopened after Covid?

Yes – the average house price in Nappy Valley has increased by £100,000 from just over £1.2m to just over £1.3m in the last 12 months; nearly 7%! Across the same period, growth in flat prices is closer to just under 5.5%. Our view is that there has been a generational shift in buyer priorities since Covid. With the availability of working from home now institutionalised across so many industries, buyers only going in a few times a week are willing to move a little further out of central London to guarantee outdoor space. Ed Lugg

Outside space has always been important in our area, however, I don’t think there is quite the same focus on the size of garden as there was post lockdown. The internal fit and finish seems to be number one on the priority list. Joel Baseley

Yes indeed, unless it’s a small, lower-value flat buyer. For larger flats and houses, all buyers typically want some form of outdoor space. Edward McGrane

Where are sellers moving to – is the exodus to the countryside still happening?

I never really felt that the exodus to the countryside happened in the first place. That turn of phrase conjures up images of streets of empty houses where the owners have packed up and run for the hills. In reality, I think there were some families who brought forward their inevitable move out of town by a year or two if they were lucky enough to find a suitable property in the home counties, and there was a queue of people wanting to upsize in London, snapping up anything of quality that came to the market. Joel Baseley

We’re not seeing a huge exodus out of London except from the typical larger family moving from the city to the home counties. I think people have realised transport in London is excellent and most companies are wanting employees back in the office and not working from home all the time. Edward McGrane

What is the supply and demand situation in the current rental market for houses in Nappy Valley?

This year the demand for good private rental property has been unprecedented. The shortage of a good spot has driven prices up anywhere between 5% and 20% depending on the property. There is a little more choice available now but I am afraid the market is still extremely competitive if you are a tenant. Joel Baseley

Exceptional demand and very little supply meaning rents have increased 10-20% in some areas. Edward McGrane

The lettings market in Nappy Valley continues to remain strong and mirrors the wider lettings landscape where there is a massive imbalance of available property supply versus tenant demand, meaning that rental properties that do come to market are snapped up very quickly with rents remaining high. Vatche Cherchian

Compared to pre- and post-Covid years, how would you describe the success of the property market in 2022?

2022 will go down as one of the busiest markets I have ever seen. Joel Baseley

We have seen great success across our network during 2022. Stamp duty reform has certainly helped, as has a small correction in pricing plus buyers coming back to the city from the country.  Edward McGrane