The Expectations Gap - Black Brick Property
With talk of ‘fear of missing out’ and a ‘feeding frenzy’ characterising regional markets outside London, Prime Central London continues to dance to its own tune, with the best of the market recovery still lying ahead. Indeed, the confluence of a restricted supply of properties to the market, subdued rents and a rising domestic housing market are creating dilemmas for many currently looking to purchase.
Black Brick Partner Caspar Harvard-Walls has observed the dilemma the market recovery is starting to create for buyers: “Some of our clients are currently in rented houses or flats where rents are 15% lower than they were in early 2020 and are finding themselves questioning whether they should really take the plunge and buy. Against a backdrop of rising prices during the pandemic, these buyers understandably do not want to shift to a less favourable property and wonder whether waiting could improve the situation. While renters might be hoping that the quality gap will start to converge over time, it is actually more likely to diverge as capital values continue their recovery. These buyers risk getting caught in a waiting cycle. In this market, staying put may not be the right financial answer long-term.”
Looking ahead, Caspar judges there will be one more quarter before the market takes off for a deferred Autumn selling season: “The PCL market has proven resilient even without the return of foreign buyers. When it comes back, the first few percentage points of capital appreciation are likely to materialise quickly. The best window we have had into what a PCL recovery looks like was January and February 2020, when Brexit and the general election were out of the way but the pandemic was yet to take hold. If this proves to be an accurate insight into the future, there is a risk that cautious buyers get caught out in the Autumn.”
As Camilla Dell, Black Brick Managing Partner notes: “Overseas buyers are not yet rushing back for the summer. The summer months would also usually see an influx of buyers from the Middle East, but with many of those countries still on the UK’s red list, the usual flood of buyers from this region will be delayed. Depending on how the next few months goes, there may be more interest from overseas buyers coming to the UK and self-isolating.” In fact, there may be new sources of foreign demand supporting the market in the coming years. As the Telegraph’s Rachel Mortimer recently reported, Hong Kong buyers are becoming a more significant presence in the London market: “The proportion of London homes bought by Hong Kongers has quadrupled since a new visa scheme allowing residents of the island to relocate to Britain was announced last July. Property firm Benham and Reeves said Hong Kong buyers now accounted for 4pc of London transactions among its clients, up from 1pc. The rise intensified since the British National Overseas visa opened for applications in January. The new policy could see 300,000 Hong Kong residents move to Britain in the next five years following increasing interference in the region from mainland China.”
Get in touch
Black Brick Property Solutions LLP
15 Bruton Place, Mayfair,
London, W1J 6LU
Camilla Dell, Managing Partner
+44 (0) 20 3141 9860
+44 (0) 7887 827 176
camilla.dell@black-brick.com
