Crunch Time?

Well, the good news is that there’s no need to start stockpiling tinned goods just yet. Between April and June this year, the average overall house price in Hammersmith and Fulham was £753,952, with semi-detached at £1,351,818, terraces at £1,303,149 and flat’s at £503,867.

So the market’s healthy in many ways, but there are also plenty of hurdles for today’s house hunters. In Fulham (SW6) there are still many, many more buyers than there are sellers in the market, or at least there have been recently. And this chronic under supply of property means that the market remains extremely competitive.

So what’s selling? Fulham properties on or below the £2 million mark have seen a spike in sales in the last quarter; this could be down to buyer’s reluctance to pay the additional stamp duties that are enforced on properties above £2 million. That said, there are still opportunities for buyers to land that rarest of fish – a large family home with potential for serious renovation both above and below ground.

Bubble Trouble
Consumer confidence, the government’s Help to Buy Scheme (more on that in our Mortgage Comment), last year’s Olympics and even the fact we had a decent summer…all these are contributing factors – of varying degrees – in the recent, and fairly startling, rise in house prices. A recent survey from Nationwide revealed that across the country, the average UK home is increasing in value by £50 a day, with that figure rising considerably depending on the value of the property. This puts the annual rate of growth at 5% nationally and 10% in London – in both cases the strongest figures since 2010.

These figures came to light as the Treasury announced that the Bank of England would have greater involvement in monitoring the Help to Buy scheme, which the government hopes will kick-start the market, but others fear will be the catalyst for another bubble.

The Bank’s financial policy committee (FPC) will now make annual reviews much earlier than originally planned and could recommend that the starting cap of £600,000 for the mortgage guarantee is reduced. The committee was originally due to assess the scheme three-years after the January start date, but the fact this has been brought forwards is yet another sign that Help to Buy – while excellent news for many lower income families – carries a great deal of risk.

A Treasury spokesman said recently: “The FPC’s assessment is that recent developments in the housing market represent a broadening recovery from low levels of activity, but that we must remain vigilant as that recovery progresses. The chancellor has asked the FPC to work with him every September, starting next year, to assess the ongoing impact of the Help to Buy scheme. Following that annual assessment he has proposed that the FPC advise him on whether the key parameters of the scheme – the price cap and the fees charged to lenders – remain appropriate.”

This is arguably a way for the government to secure a way out, should the scheme fail, with the Treasury spokesmen adding: “At the end of the scheme’s three-year life, if a future government proposes to extend the scheme, the FPC will have to give its agreement.”

Money talks
If you choose to live in London, you choose to live in one of the world’s financial hubs. This means that the capital’s increased salaries and living costs magnify any economic ripples. However, this hasn’t deterred the number of foreign investors who’re still snapping up property in the capital at an extraordinary rate. Many of the property sales in Fulham are to people from mainland Europe, this means that many homeowners are at the mercy of the increasingly unstable Euro market. So what would it mean to London if the Euro collapsed? Tom Becket, chief investment officer of PSigma Investment Management, told the Telegraph, using Greece as an example: “If or when Greece does leave the Euro, it will cause a flood of capital leaving the peripheral nations, some of which will inevitably end up in London property, meaning that London house prices might continue to defy gravity for some time.”

“During the height of the financial crisis, the wealthy citizens of two countries at the epicentre of the disaster – Greece and Italy – bought £400m of London property.”

When laid out, the figures are quite remarkable. During the height of the financial crisis, the wealthy citizens of two countries at the epicentre of the disaster – Greece and Italy – bought £400m of London property. Fearing the single currency would collapse, Europe’s wealthiest and most at risk got their money out of the Euro and parked it where the government was relatively stable and the tax regime was friendly.

Long Term Planning
For the time being, it’s business as usual. Those with the money to invest in the right house in the right area are making very sound investments. London shows no sign of becoming any less desirable. A recent survey from commercial property consultancy Cushman & Wakefield put London in second place behind New York as the best place in the world for property investment, The Big Apple attracted the most commercial property investment during the last year, with volumes increasing by 39% to US$49.2bn. London wasn’t far behind with volumes increasing by six per cent to $32.3bn (£20bn) in the year to the end of June 2013.

There is another contributing factor to the resilience to market fluctuation of prime London postcodes such as SW6. Between 2007 and 2009, the major effect on the property market in Fulham was a drop in turnover as people stayed put and waited for the market to settle and the prices to rise back up again. Secure in fortress Fulham, residents were able to weather the storm thanks to low interest rates, meaning very few people were forced to sell up.

Safe Haven
The ultra-gentrification of Fulham over the past year has put it at the top of foreign investors wish lists, too. This has meant house prices have soared in the past year, with the Evening Standard reporting that £1million invested in a Fulham property would have gained £2500 a week over the first three quarters of 2013. Fulham and the surrounding SW post code area is scooping up those buyers who, despite considerable incomes, have been priced out of the central London market.

No longer the understudy to Kensington and Chelsea’s starring roles, Fulham is now very much becoming part of the club (but without the full price tag – yet). There’s plenty of quality education options too, from Pippa Pop-ins nursery, to private prep schools such as Hill House not far off and closer to home Fulham Prep. You’re also in close proximity to Westminster and St Paul’s, as well as top-flight state schools including The London Oratory School and Lady Margaret School on Parsons Green. Then there are the shops, bars, boutiques, organic delis, independent coffee shops and excellent transport links.

Purchasing power
Historically equity price busts occur on average every 13 years and last for only 2.5 years although with the invention of the internet, shifting economic powers and an increasingly more global world, this may no longer be the norm.

“A bubble occurs when prices reach unsustainable levels and then ‘burst’ and sink.”