Breaking News: The bottom of the Prime Residential Market in London, may have passed six months ago

 

Breaking News: The bottom of the Prime Residential Market in London, may have passed six months ago

There is now a perceptible mood change with buyers in the middle to upper sector of the Residential Property Market in London.

As we all know, last year was a mixed bag of blessings and curses. Trading during the first two quarters, for us, was disastrous, but during the last two quarters, we enjoyed some interesting business conducted on a number of residential properties in middle to upper ranges.

£90million in aggregate

In fact, in respect of at least three notable properties, where terms were agreed totalling £90million in aggregate, for a variety of reasons all seemed to loose their way before Christmas. In the New Year, we naturally expected the malaise to persist, as the Public was assaulted by a cacophony of negative comment in the media, but this certainly was not the case.

For quite separate and independent reasons, all three buyers imposed deadlines, on themselves, for consolidation in the New Year and all of them, without fail, have now sold. This takes the tally of sales, in the Kenwood area of London, to

£110million, in the last six months of trading, which is extraordinary.

Although mortgages were required in all three cases, the prospective purchasers became so ‘fed up’ with the labyrinthine banking regulations and compliance, that they all decided to exchange contracts without the comfort of a ‘sign off’ from the mortgagee, which in one notable case had consumed nine months of due diligence, beforehand.

End of Bear Market

I called the start of the Bear Market some three years ago, when the doyennes of the Industry were commenting otherwise and I am now prepared to comment that this ended six months ago.

It appears that the cognoscenti of buyers, who have waited for many years for prices to ease, are now ‘coming off the wall’ since they sense that this could be the ‘bottom of the curve’.

International buyers from Eastern Europe, South Africa, The Middle East have been saying, in unison, that with the discount in Sterling from the Brexit result, together with the drop in prices, a 50% aggregate saving can be enjoyed from values that persisted three years ago. This is having a great, positive, effect on certain trophy properties within the northwest London corridor and long may that continue. There is no other equivalent opportunity in the rest of the World.

‘Need to buy’ Eastern Europeans, particularly Russians, who lost out after the Credit Crunch of 2008 have been waiting for this ‘perfect storm’ moment to fill their ‘saddle bags’ with residential property in the Capital which they see as buying a piece of English heritage.

Admittedly, we have lost six of the 10 cash buyers, that we had in the halcyon days of the past as a result of the Stamp Duty hikes and Non Dom changes, but the residual ones are now driving through their acquisitions with great aplomb.

Avalanche of Saudi Arabians

In fact, as a result of the traumatic reforms that King Salman of Saudi Arabia is imposing on some of the country’s ‘Arab oligarchs’, we expect there to be an avalanche of buyers from this region coming to our shores. They do not feel comfortable in the USA and there is nowhere else in Europe, apart from London, that they want to establish their base if they are not already there. Their money is certainly much safer here, secured by assets, than it is back home, where it could be easily confiscated by the militant, Saudi Arabian regime.

The stock overhang in this sector, which has lasted now for at least three years, is slowly being re-absorbed and I believe prices will firm as a result of this before they rise.

Even land with derelict properties, without planning consent, are being ‘hoovered up’ by canny buyers who sense that future growth is not far away and they quite like saving of a third of the Stamp Duty, that would be the case if they bought a completed mansion.

To circumnavigate SDLT, some international buyers, who are only planning to be in the UK for up to five years, are choosing to rent instead of buying, since effectively, this costs them nothing as against the 20% tax/costs that would be involved in purchasing and selling an expensive property in London. As a direct result, we have had rental requests for some of our bespoke mansions at an eye watering £50,000 per week level.

No ringing of bells

‘They don’t ring a bell when sentiments change from a Bear to Bull market, but if they did, the sound would be deafening!’

By the way: Rightmove has been quoted in the Press as saying ‘the boom in London has finished’. I don’t want to tell them that they may be behind the times, but the boom finished two and a half years ago when Mr. ‘Hapless’ Osborne, hiked the Stamp Duty rates and since then, London values have been on the slide and are now down by 25% plus, numbers of transactions are a fraction of what they were. Rightmove, ‘keep up’!