28th March 2023
12mins
This is the time of year when pundits attempt to take the temperature of the housing market. The worst chills of winter are behind us, and they are hunting for early clues as to how property will perform during the rest of the year.
So far all the signs are that buyers are out there, but that they are a more cautious and judicious bunch than last year.
Sellers, meanwhile, are feeling rather shy about putting their homes on sale when the strength of the market remains an unknown quantity – although many are not averse to putting a few discreet feelers out.
The result is a market which not quite full steam ahead but certainly buoyant and moving forward – or, to borrow another nautical expression, steady as she goes:
One way to assess the health of a housing market is to look at the difference between what vendors want for their properties and what buyers are willing to pay. Pre-pandemic the spectre of Brexit, plus a series of increases in buying taxes, created an average 13 per cent gap between asking and selling price across prime London.
During the pandemic, when many buyers appeared to throw caution to the wind, the gap between asking and selling prices narrowed significantly, hitting an average five per cent in July 2022.
This year, according to new research by price analysts LonRes, buyers are becoming increasingly anxious about overpaying for a property in a market that feels less than steady and as a result the margin between asking and selling prices has widened rapidly, to an average of more than eight per cent.
Whilst vendors willing to negotiate is good news for buyers, the widening gap between asking and selling prices makes it increasingly hard to know where to begin negotiating.
“In our system the asking price to some degree has to be ignored,” said Caspar Harvard-Walls, a partner at Black Brick.
“When we get to that point, we look very carefully at completed sales data. It has to be within the past six months, and it has to be a very direct comparison. There is no point comparing the penthouse at 20 Grosvenor Square in Mayfair with a Mayfair flat in a 1930s block.”
He finds basing an offer on price per square foot a “very blunt instrument” when assessing the value of a home. “It doesn’t take into account outside space, views, which floor it is on … there are lots of variables to consider, the whole market is wildly nuanced.”
Local knowledge is crucial. Take Egerton Crescent in South Kensington, half a mile from Harrods department store, and long regarded as one of London’s most exclusive streets.
Its white stucco townhouses look very similar, but those at the centre of the crescent are more sought after because their squared off roofs mean larger top floor rooms. The redbrick mansion apartments in Cadogan Gardens, Chelsea, are another good example – some are blighted by noise from the adjacent London Underground lines and are thus worth less than similar looking homes which are not.
The spring buying season has begun with more of a whimper than a bang this year.
The good news is that buyer confidence seems to have recovered from the shock of last year’s mini budget.
But estate agent Chestertons warns that the number of homes being put on the market is failing to meet demand from buyers, and that trend is unlikely to change as we enter the traditionally busy spring season. It reports carrying out three per cent more viewings during February this year than it did in February 2022 and there were 17 per cent fewer sellers entering the market.
The knock on effect of this will be fewer new properties coming onto the market this month, leaving many buyers frustrated.
Harvard-Walls believes part of the reason vendors aren’t getting round to list their homes is the confluence of two major holidays. Easter Sunday falls on April 9 and Ramadan, the Muslim holy month, started on March 23.
“There is certainly nothing coming up in the £3m to £9m flat market in central London at the moment,” he said.
Dell said part of the reason for the slim pickings is that increasing numbers of buyers are opting to sell off market with no online presence.
“At the moment, because the market is a bit uncertain and unsure, sellers don’t necessarily want everyone to know what their asking price is,” she said. “I use the analogy of a game of poker, where you want to keep your cards close to your chest.”
In 2021 41 per cent of deals struck by Black Brick on behalf of clients were for homes being sold off market. Last year that rose to 50 per cent, and in the first quarter of 2022 it has risen to a resounding 55 per cent.
Londoners have long debated the relative merits of living north of the River Thames versus heading south.
And certainly, when it comes to property price staying power, the north tends to perform most strongly.
According to the latest price data from Rightmove, asking prices across the British capital have inched up by an average 2.5 per cent over the past year.
The best performers make up a long swathe of north London, running due north from Holborn all the way out to the leafy, semi-rural fringes where London meets the home counties.
Asking prices across Camden have increased by an average 13.4 per cent in the year to March, reaching just over £1.1m. In neighbouring Barnet prices are up seven per cent, to an average of almost £712,000.
“They are both good family areas,” explained Camilla Dell, founding partner of Black Brick. “They have got plenty of really top schools, good connectivity, Camden in particular is really close to central London, and they have lots of green open space.”
Taking on a fixer upper has never been a task for the faint hearted. But post-Brexit it has become even more challenging. Britain’s construction industry is stuck in a “chronic skills gap”, according to the Federation of Master Builders (FMB), which warns that a third of firms are struggling with shortages of carpenters, bricklayers and general labourers.
Separately, a group of conservation bodies and landowners, including The National Trust and The Crown Estate say hundreds of thousands more workers are required to work on energy efficiency upgrades. They blame the shortage on the pandemic, workers going home during Brexit, and an ageing construction work force.
What this means, in practical terms, is that many people are reporting they can’t find a plumber or a kitchen fitter for love nor money.
Which is a pity because London is full of beautiful, but slightly neglected old houses just crying out for modernisation, and the rewards can be considerable.
Dell said most of her clients would prefer a turnkey property, considering managing renovations to be too much of a hassle at the best of times.
“You do get some clients who are open to the idea of doing work, and are passionate about how they want to live, and you can buy unmodernised properties well and then really add value,” she said.
“We acquired a house for a client in a very prestigious street in Notting Hill backing onto one of the large communal gardens,” she said. “It was totally unmodernised and they paid about £3,000 per sq ft for it. We introduced them to a planning consultant, and they got permission to build a basement and install a swimming pool, which added enormously to the value of the property. Last year we received an unsolicited bid for the property, in excess of £5,000 per sq ft.”
Another successful renovation was carried out by American clients who bought a dated apartment in Regent’s Park for just over £2,000 per sq ft. They had it renovated – again Black Brick was able to put them in touch with all the experts they needed to make it happen – and are thrilled to have put their own stamp on their London home. They are also content in the knowledge that similar apartments in the same building now sell for £4,000 plus per square ft.
While prime London is grappling with a shortage of stock, at the very pinnacle of the market buyers are being presented with the rare opportunity to purchase one of the capital’s largest, grandest private houses.
The Holme is a 40-bedroom Georgian mansion set in four acres of gardens in Regent’s Park – and it comes with a £250m price tag.
At present the record for the most expensive piece of London residential real estate is held by a mansion on Rutland Gate, near Hyde Park, which changed hands in 2020 for £210m.
The 29,000 sq ft The Holme has the potential to smash that record, and it is certainly a showstopper, built in 1818 by James Burton, the property developer who masterminded most of Regency London.
The house was designed by Burton’s son, Decimus, and the Burton family lived there. It has been described as The White House in Regent’s Park thanks to its white stucco façade, and is set overlooking an ornamental lake.
Clearly there are not many buyers in a position to buy such a home. The Stamp Duty bill alone – assuming it is sold to an overseas buyer as a second home – would exceed £42m.
And Dell fears that the strategy of publicly launching the property could backfire. “One of my clients said to me that now that “every man and his dog” knows all about the home all of its privacy has gone, and that could be a deterrent.”
However its unique architecture and sheer scale should, believes Harvard-Walls help override any issues about privacy. “I suspect it will go to a private person with a very long term view, and I also suspect that the likelihood of somebody buying it in sterling is pretty low.”
Camilla Dell is the special guest on the latest episode of The Real Rendezvous, a collection of interviews with leaders in the world of property, luxury and lifestyle.
She talks hosts Caroline Donaghue and Priya Rawal through her career beginnings (including failing to win a spot on an early series of The Apprentice), to being named one of 25 most influential people in British property in the Telegraph’s Property Power List.
Learn about her journey here: https://podcasts.apple.com/us/podcast/introducing-camilla-dell-managing-partner-and-founder/id1604067081?i=1000605076377
Dell has also been joined by two of her Black Brick colleagues in The 2023 Spear’s Property Index, which profiles leading lights in the world of property. She is one of only eight British buying agents given a “top flight” rating, while Caspar Harvard-Walls is “top recommended” and Tom Kain is “recommended”.
Black Brick are delighted to announce that Managing Partner Camilla Dell will be visiting Geneva from Wednesday 26th to Friday 28th April inclusive.
If you are based in Geneva and have an interest in London property, or work with clients that are considering a purchase in the near future and would like to arrange a confidential meeting with Camilla to find out more about the London property market and how we can help you, please email camilla.dell@black-brick.com
Our client was after a four bedroom house within easy reach of the West End. Their budget was up to £3.5m, and they didn’t want to have to do any work.
We found them the ideal property – a spacious freehold house a five minute walk from Hyde Park, with a study, garage, and off street parking, and a private garden.
By taking our advice in negotiations our clients were able to secure the house for £100,000 less than its original asking price of £3.5m.
Several years ago, we had helped clients based in Ireland to buy this lovely, three bedroom, three bathroom mews house. They loved the house but, due to ill health, they found they were using it less and less.
They came back to us asking if we could discreetly help them find a buyer for the very pretty property, which was well maintained and has a lovely courtyard garden.
Through our network we found a cash buyer – who bid more than our delighted clients had paid for it in 2019. The sale went through within just four weeks.
We would be delighted to hear from you to discuss your own property requirements. For a non-obligatory consultation, please contact us.
