Spring Prime Property Insight - Eccord
Spring seems to be firmly here and outlined below are some of the trends that LPF Members Eccord are seeing in the prime central London property market.
Buyer demand remains
The number of new prospective buyers in prime central London in Q1 was 84% higher than the five-year average, and the number of offers being accepted at asking price or above is at the highest since 2013.
70% of the buying clients Eccord has represented over the past 12 months have proactively searched themselves, unsuccessfully, before appointing them.
The lack of supply is attributed to a number of factors, one of which is the vicious cycle of prospective sellers holding off because they are unable to find a property to move into. See below their advice to anyone in this position.
In other cases, sellers in particular areas are holding off selling while they wait for investment or gentrification to increase values. Bayswater is an example, where some would-be sellers are waiting for key developments such as The Whiteley and Park Modern to complete.
The £5m+ price range is still driving the market and latest figures show that 25% more properties above £5m changed hands in Q1 this year versus 2021. Best in class properties are still attracting multiple bids.
Despite buyer demand, the market feels measured and price sensitive. Recent data showed that when a new sales instruction is priced correctly, the average sale time is within three months and only a 1% discount accepted on the asking price. But where a property is initially overpriced, it remains unsold on average for a year and the average discount becomes 14%. They would encourage anyone selling to take note of this.
More supply – but don’t expect it to keep flowing
More supply is coming on to the market, but this is largely because estate agents have held back new instructions over the past 4 – 8 weeks, and have now formally launched everything in one go. This is a common (and quite successful) tactic to bring buyers into the market who have been sitting on the fence.
But don’t be fooled that this now marks a new era of more instructions. From speaking to the selling agents across London, their new sales pipelines remain thin.
If the right property comes up, be decisive. Eccord has just secured a property for a client who has been in touch with them for seven years. He decided he was finally ready to buy and they carried out an exhaustive search with two rounds of viewings with him.
They are thrilled to have just agreed his purchase of an off market property which they identified within sales archives and secured a one off viewing. Because they had fully educated their client about the market and his options, he had complete confidence bidding on a property early into the process.
Advice for buyers in a chain
Eccord has seen an increase in chain transactions, particularly with domestic buyers spending £5m - £10m.
Your position as a buyer is extremely important and the selling agents are increasingly unwilling to notify unproceedable buyers about new instructions or carry out viewings with them.
For those needing to sell their existing home in order to be ‘proceedable’ to buy the next one, they are advising them to secure a buyer for their sale and make the buyer wait (within reason) while they find and secure an onward purchase.
Most buyers – particularly those buying longer term homes – are willing to accept longer completion dates, in return for the right property.
Last year the average time between exchange and completion for their clients was 6 weeks and this year it has more than doubled to 13 weeks.
Eccord attributes this largely to the number of off market properties they are securing – in many cases they have made direct approaches or identified specific properties within archives and their network. In these situations, owners are not proactively marketing their homes for sale, and therefore require a longer completion timeframe – which is worth it for the perfect property.
Rental market continues to track the sales market
The rental market is still tracking the sales market with a lack of stock, strong competition amongst tenants and price rises. The lack of rental stock is one of the reasons why rents have been rising at such pace since last August, and this has brought welcomed rent increases to existing landlords.
High inflation has brought more investors to the market and, for the first time since 2016, data shows that investors bought more properties than they sold – although the focus was on higher yielding areas outside of central London.
In prime central London, yields aren’t high enough to entice for pure investment purposes, and the investor clients they have represented have all been discretionary, price sensitive and purchasing for dual purpose – investment in the medium term and planned personal use in the long term.
Landlords self-managing are advised to be informed about ever changing and increasing regulation to ensure they fulfil their legal obligations. They have been contacted by a number who have come unstuck, having not been aware of their obligations which has meant they couldn’t serve notice to tenants when they wanted to.
Eccord is also seeing an increase in sublet companies posing as individual tenants, requiring their property management team to be extremely vigilant when marketing and agreeing offers for their landlords’ properties.
If you are looking to acquire a buy-to-let investment, or have existing rental investments, their experienced rental and property management team would be delighted to discuss this with you: +44 (0)20 7244 4485.
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56 Sloane Square,
London, SW1X 8AX