Spring Bloom for Property Market

From taking a leisurely stroll and enjoying the local history to eating out and taking in the stunning views, few would deny that when spring arrives there are not many better places to be living than on or near the River Thames, which may explain why demand for property in and around Fulham is rising and the local property market is blooming.

Having taken a major knock following the introduction of the stamp duty surcharge last April and the shock of Brexit, with prime minister Theresa May having now triggered Article 50 to formally begin the process of withdrawing from the EU, some doomsters forecast that property prices in prime areas like Fulham will continue to fall, and yet prospects for the housing market here are now starting to look rather promising.

The market in Fulham has been subdued for some time, but there are currently plenty of signs of renewed activity, on the back of the UK’s strong economy, recent property price falls, declining unemployment, record-low interest rates, and an influx of international purchasers looking to escape the Trump-effect and increasing instability in Europe by taking advantage of the weak pound to secure a safe haven asset in one of prime London’s smartest areas.

Asking prices in Fulham have fallen by 10-15% since they peaked in late 2014, when former chancellor George Osborne increased stamp duty on properties over £1 million, according to analysts at Brik.

The price falls, combined with a 15% drop in the value of the pound against the dollar since the EU referendum last June, means the Fulham market is now around 30% cheaper for an overseas buyer – and up to 40% less expensive for some individual properties.

The fall in property prices reflects the fact that sellers are increasingly aware of the need to factor in the impact of higher stamp duty, not to mention political and economic uncertainty, into asking prices in order to attract cautious buyers, and it is a strategy that appears to be working.

Transactions
Property sales in Fulham have picked up significantly in recent weeks as purchasers look to take advantage of more ‘realistic’ asking prices, according to James Sims, sales director at Brik.

“We are seeing a lot more buying and selling activity across all price brackets,” he said. “Most buyers are taking a minimum ten-year view with their acquisitions, as they acknowledge that life must go on, despite economic and political challenges.”

The housing market has long required a boost in supply and so it is good to see that new listings rose in March, and could yet increase further as sellers list their properties in time for the spring market.

James commented: “It is very encouraging to see that new stock levels are rising as we enter spring, which is a traditionally strong period for the property market, as reflected by the recent surge in the number of applicants registering to buy, many of which are wholeheartedly committed to purchasing.”

But despite the rise in the number of properties for sale, the National Association of Estate Agents (NAEA) report that there are currently 11 purchasers chasing each property for sale and in many cases the number is far higher here in Fulham.

Consequently, a greater volume of homes are selling for in excess of the original asking price, as sealed bids and gazumping starts to return to the market - another sign of the remarkable spring revival of a market that has been rather sluggish for the past couple of years.

“With high levels of interest from buyers, we’ve seen two sealed bids in recent days, and a few more being lined up on behalf of people looking to sell property quickly at the best possible price,” added James, who reports that the market is picking up across all price ranges, particularly in the sub-£1 million bracket where stamp duty rates are lower.

Given the ongoing supply-demand imbalance, it is perhaps unsurprising that property prices in and around Fulham are starting to rise once more.

The latest figures from the Land Registry reveal that the average price of a home in London experienced the greatest monthly price growth in January with an increase of 3% to £490,718, against a national average rise of 0.8% month-on-month, taking the average UK home value to £218,255.

[The price] uplift is an indicator of a shortage of suitable property for sale,” said Miles Shipside, Rightmove director and housing market analyst. “There is strong demand for the right property at the right price.”

But while buyers are now jumping in where they see good value, good locations, or both, they remain price sensitive and continue to avoid anything that looks overpriced.

The same could be said as far as renters are concerned, but rental costs are on an upward trajectory, the latest figure show.

The private rented sector
Activity in the private rented sector, which now forms a crucial part of London’s housing tenure mix, is buoyant, but as we enter the traditional letting season, there remains a lack of properties available to rent, which means that the number of prospective tenants continues to outstrip supply, perhaps supported by a return in the volume of corporate tenants registering to live in Fulham.

With renters facing heightened competition, rental prices are rising across the area, as reflected by the latest HomeLet Rental Index, which shows that rents in the capital rose 1.6% in February compared with a month earlier.

The average rent in Greater London for a new tenancy starting in February was £1,520 per month, up from £1,497 a month earlier, based on HomeLet’s figures, but the rents being achieved in Fulham are generally higher, reflecting the desirability of the area as a place to live and work.

But while demand for rental property remains strong, research from HomeLet shows that landlords’, conscious of the need to raise rents to offset an increase in their tax liability, remain mindful of tenants’ ability to pay higher prices.

“In recent months, we have seen landlords treading very carefully with rental price rises,” said Martin Totty, chief executive of Barbon Insurance Group, HomeLet’s parent company.

While it is very much a ‘landlord’s market’ at the moment; an attractive proposition for buy-to-let property investors, which largely explains why many shrewd investors currently view Fulham as a safe place to invest in property, there are concerns about the impact of recent tax changes on the private rented sector, including mortgage interest relief and stamp duty reform.

Many buy-to-let landlords had hoped that the Chancellor Philip Hammond would use his recent Budget statement to the House of Commons to reverse some deeply unpopular tax changes announced by his predecessor George Osborne.

But in the end there was widespread disappointment that Hammond chose to overlook all of these concerns, having failed to even give housing a mention in his speech.

Nevertheless, as a long-term investment, property has historically performed well, and although the government has changed the traditional buy-to-let landscape, which will have long-term ramifications for the rental market, the fact remains that demand for private rented accommodation is growing, void periods remain low and yields are broadly stable, while prospects for future capital growth continue to look promising.

In the face of political and economic uncertainty - domestically and globally - a stable return on property in Fulham will remain a prime asset that investors will want exposure to.