It seems these days that every article you read about London property will quote "since the Brexit", "post Brexit (PB)" or something along such biblical lines, suggesting that the Brexit result was such a monumental watershed in the history of London property that everything that went before is quite irrelevant. What happened, and is happening since, is subject to the aftermath of this gargantuan event whose tendrils affect every business sector of the UK, every pub chat and every dinner party.
Like the result itself it seems that the property market is on a knife edge. Balancing between the impending doom of ‘Brexit' and the sugar-high of the latest positive economic result.
Figures from the Office of National Statistics (ONS) released last week show that property prices across England increased by 9.2% in the year to August 2016, compared with the year to August 2015, and that figure for London was a healthy 12.1%. Of course let’s not get the ice cream out just yet because these numbers only include approximately two months of Post Brexit (PB) market.
The London picture itself differs greatly from borough to borough. Camden comes in at last place with a reduction of -2.7%, Hammersmith & Fulham - with its similar average price of around £780k - was up 1.9%, while the largest increases were observed in areas where average property prices fall below £500k at around 12% growth. When you plot these figures on a graph you can clearly see that the cheaper the borough, the faster the rate of property growth. Plot the average gain and you’ll find that boroughs with prices averaging at or below the £400k mark also provided the biggest absolute gains. On average properties in London’s cheaper boroughs increased by about £1k a week! No wonder so many want to get on the ladder. Indeed 72% of people want to own their own home within two years, according to recent research from the Council of Mortgage Lenders. This insatiable demand, low interest rates and decent average wage multiples for couples is what will keep driving this ‘sub £400k market' irrespective of even the gloomiest property news to come.
Hammersmith and Fulham is now the fifth most expensive borough in London and well out of reach of the majority of London’s first-time buyers. A significant amount of its value was gained during the last big price rises over 2013/14. A vast amount of capital is now tied up in residents' properties and it’s this capital, or the thought of losing it, that is worrying owners. It’s also the reason why many people here don’t have to sell and why there’s less demand from buyers.
Owners are tenacious when it comes to hanging onto their treasured property assets, and the clear result is that turnover in higher priced areas has fallen off a cliff as buyers' offers fail to match their high expectations. There are however plenty of buyers looking, but few sellers moving on price. Buyers are like the proverbial cat at the mouse hole, waiting for the very best deal they can get. Whilst the mouse is safe in the knowledge there’s plenty of cheese in his hole and there’s no need to make a run for it yet.
What’s to come? As always the property market is controlled by confidence and this is heavily influenced by the media. We agree with Jeremy Leaf, former chairman of RICS who said that “house prices are proving to be more resilient than expected”. Slow capital growth (especially in highly priced Fulham) with alternating advances and retreats can be expected over the next year or three as the Brexit plays out.
Exactly what it is that is coming over the hill will change with each new media out pouring. Some weeks sellers will feel they’ve got the upper hand, in others buyers will take control. The result will be a rollercoaster ride until the Brexit negotiations are complete and some degree of certainty finally returns to the market. One thing is certain though, ‘Brexit’ related headlines are here to stay.
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