31st May 2024
9mins
While we await the contents of the manifestos of the main political parties with interest, whatever their content, history tells us that elections and a busy property market tend not to go hand in hand.
Hot on the heels of the election being called, estate agent Knight Frank revised its house price forecasts. In January, it expected PCL to see one per cent price growth this year. Now it expects a one per cent drop, with price growth recovering in 2025 with three per cent growth, and five year cumulative growth of 16.4 per cent.
The Labour Party is the clear favourite to win the election, and we do already know about some of its plans: reform of the hated leasehold system, which Black Brick welcomes although the devil will be in the detail, a dismantling of the Non Dom tax regime, and possible hikes in Stamp Duty for overseas buyers.
Camilla Dell, managing partner of Black Brick, believes that if these latter plans are implemented, a new two tier scenario will evolve in central London’s property market.
“We may see some softening in developments and locations which are super geared towards discretionary overseas buyers,” said Dell. “And, inevitably, there will be some domestic buyers who decide to go on hold until after the election, or who want to see and digest the manifestos before making a big decision.
“But there will also be people who just want to get on and buy a home.
“The election will mean different things for different people.”
Post-election, Dell predicts that domestic markets – three to four bedroom family homes in places like Fulham, West Hampstead, Dulwich, and Clapham which are already in high demand and being hotly contested by buyers – will shrug off the new regime, whilst top end prime central London property may suffer from hiked Stamp Duty.
“There is already very little demand in places like Mayfair and Knightsbridge in the £5m to £10m bracket,” she said.
Dell’s advice to overseas buyers who are certain they want a London property, is to waste no time. “They should really crack on before the election because it is just going to get more expensive to buy afterwards, and try to use the forthcoming election and uncertainty as a tool to negotiate harder on price.” she said.
Superficially, the news from house price analyst LonRes that the number of properties going under offer in PCL is up by almost 20 per cent year on year should be reason for celebration – pointing to an uptick in transaction numbers in the coming months.
But LonRes also highlighted an increase in the number of deals falling through before contracts are exchanged – up almost 27 per cent compared to pre-pandemic levels.
“One of the main reasons for why sales collapse is that the time it takes to conveyance a property is extraordinary,” said Dell. “We have just bought something in West Hampstead for a client, and it took more than two months for the local search to come through.”
A fast fix for this particular problem would be to require vendors to get local authority searches carried out before a home is listed, although the survey and legal processes can still be painfully sluggish.
“What kills a deal is time,” said Dell. “The longer it takes, the longer both parties have to change their minds.”
The election announcement has very much overshadowed the latest Consumer Price Index which revealed that inflation is still inching downwards. At 2.3 per cent, it is now achingly close to the Bank of England’s two per cent target – but not close enough for economists to feel confident about an imminent interest rate cut.
A cut in rates would stimulate the stagnant mainstream property market, and this could have a knock-on impact on central London where prices fell 1.6 per cent in the past year according to private bank Coutts.
It feels that there are already some signs of life in PCL – new listings are up 31.5 per cent compared to last year, and Coutts notes that pent up demand from buyers who shelved their plans last year should start coming through post-election. On this basis, it believes any price growth will be flat in 2024, but echoes Knight Frank in suggesting PCL will outperform over the next five years, simply on the basis that property markets run in cycles and price growth in the centre of the capital has been muted for ten years now.
And, despite Brexit, London still remains high on overseas buyers’ minds when it comes to strategic locations. Think Tank Oxford Economics’ inaugural Global Cities Index, rated the city top in the world for “human capital” thanks to its outstanding universities, and highly educated global workforce.
London ranked second in the overall index, just behind New York.
Some buyers will only consider new homes because of their modern aesthetic and convenience. But new data from construction intelligence firm Glenigan points to trouble on the horizon.
High borrowing costs, and the high price of materials, means that the number of building project stats recorded this year are down 21 per cent compared to 2023 as developers mothball projects.
What this means for house hunters is that in a couple of years time there will be a noticeable reduction in the number of new homes for sale. Coupled with this, several central London councils have introduced rules prohibiting the construction of large lateral flats (defined as anything 200 sq metres-plus), with Savills warning that the stock of such “superhomes” will have completely run out by 2028.
“The result will be buyers being forced into the second hand market, which does mean that prices in the new build super prime sector will be supported,” said Dell.
This beautiful and sought after sliver of south Devon has been named the most resilient property market in the south of England according to research by estate agent Hamptons.
Prices have risen higher there than any other part of the south west, south east, and London, according to the firm, with prices up 37 per cent since 2020. Nationally it takes third place.
“The South Hams has everything you want,” explained Rupert Stephenson of Black Brick’s Country & Coast Department.
“You have the seaside, but with beautiful countryside on the doorstep. The climate is mild, and the housing stock is very attractive, from traditional Devon longhouses to Georgian townhouses.”
Crucially, the South Hams also possesses great road and rail links to the rest of the country making it feel less cut off than other parts of the West Country – trains from Totnes arrive at London Paddington in less than three hours.”.
“Most of my buyers are families or couples looking to the future,” said Stephenson. “They are buying a second home with a view to moving down, or they are relocating full time. We have seen more younger buyers now that people work from home, and there is fibre optic broadband for them to use. They can commute once or twice a month and bring up their children in a lovely environment.”
Beyond Salcombe, the South Hams’ top locations include the port town of Dartmouth, Totnes with its station and great range of independent shops, cafes, and restaurants, and tranquil coastal villages like Newton Ferrers and Noss Mayo.
Inland, Ashburton on the edge of Dartmoor is a “red hot” choice right now, said Stephenson, thanks to its beautiful countryside and good road links to Exeter.
If you are considering a purchase in the West Country, please contact: Rupert Stephenson – our Regional Director for Devon Dorset and Somerset or Anna Sharp – our Regional Director for Cornwall.
Our trophy cabinet is filling up nicely after Black Brick was named property advisor of the year in the Citywealth Magic Circle Awards. The Awards, now in their nineteenth year, and regarded as the Oscars of the finance world, recognise the best wealth managers and advisors, as well as companies, in the private wealth industry, and particularly those who invest money with charities, private families and foundations.
BBC business journalist, Declan Curry, hosted the evening and funds were raised for Magic Breakfast – a charity that delivers free breakfasts every morning to underprivileged school children.
Managing Partner Camilla Dell and Partner Tom Kain were delighted to accept the award and said, “It was an honour and privilege to accept this award, against some very stiff competition. It’s also refreshing to be part of an awards ceremony that is also raising money for charitable causes.”
The multi-award winning interior designer, Katharine Pooley, has been creating beautiful properties for almost two decades. And in the latest episode of Black Brick’s podcast, Finding Perfect Property – Diary of a Buying Agent, she shares her secrets with Camilla Dell.
From her favourite projects from around the world to the current trends she loves, and the design features that can ruin a space, this interview is essential listening for anyone with an eye for style.
Click here to listen on Spotify
Click here to listen on YouTube
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Although the property was not for sale on the open market, there was competition for the apartment, but we were able to advise our clients on what to offer and present them as the most credible buyers bidding in order to win them the property.
They are now – with the assistance of an interior designer we recommended – putting their own stamp on their new home.
We would be delighted to hear from you to discuss your own property requirements. For a non-obligatory consultation, please contact us.
