“It has been a rollercoaster of emotions in the prime central London markets this year. We started the year on a run, with the momentum being carried through from last year, and there were transactions throughout the market.
The energy carried through to the spring, when the chancellor delivered his attack on high value property. The budget didn't kill the market, but it did take the wind out of its sails, especially in the most international areas, which were most affected. Buyers took the stamp duty hike on the nose .... it was an irritation rather than a deal breaker. You don't however want to try and sell a house for just over the £2m threshold though, where that extra 2% is a major barrier. The only part of the market left unscathed was below the £2m threshold, which has not skipped a beat.
The summer was the quietest we have seen in years. It was in many ways the perfect storm, with a long Olympic holiday and the threat of Europe teetering on the brink, all compounded by incessant rain (which really does make a difference). We monitored volume of trade in the prime postcodes through the summer and recorded a 50% drop against the same period last year.
The autumn has revived the market and there are definite signs of life, with transactions throughout the market once again, and records tumbling The demographics and the drivers are as broad as ever, but there seems to be an even greater appetite than usual from the Middle East and North Africa, and there is of course a small, French feeding frenzy going on, courtesy of M. Hollande.
There is still a great deal of uncertainty concerning the meaning and implications of the notorious budget, and the draft legislation is due to be published imminently. There is no unanimous opinion on the implications for the market, but it is clear that accountants, tax advisors and lawyers will profit richly as people scramble to restructure before a deadline, which may be as early as April. The danger is that restructuring proves too tiresome, costly or ineffective and selling becomes the only option, causing an oversupply. We have already seen some tax driven sales, but the majority of people have already restructured in advance, so the damage should be limited.
There may be some good opportunities out there if you can identify a seriously motivated seller. However, this can be easier said than done.”
Philip Harvey, partner at independent buying agents Property Vision, comments on the country market:
“We are expecting market levels in the country to start re-establishing themselves in 2013 as sales which have been agreed in 2012 provide a pricing benchmark for buyers. A number of properties that failed to sell in autumn 2011 and summer 2012 have now sold as prices have been reduced; realistically this appears to be around 15-20% below prices at the peak in most cases.
Some buyers have been paralysed by fear and until a number of sales have been made, they have been cautious about committing to the purchase of a property. A real concern on the other side of the fence is that currently achievable prices will not induce vendors to come to market."
What everyone needs to realise, but particularly vendors, is that the country property market has fundamentally changed as a result of the economic climate. Although a number of homeowners are holding out for the spring market, realistically it is impossible to guess how long it will be before we see any real signs of price recovery. However I do not expect anything other than mild fluctuation for the next 3-5 years. There are still a good number of active buyers out there, so now could present a real opportunity to sell, but you must be prepared to play by the new market rules."
The market around £650,000 to £1.25m has remained busy in 2012 and this will continue in 2013. However the £1.5m-£3m market, which is predominantly affected by the performance of the city, and relies on the traditional city buyer, is unlikely to see significant rises in transaction levels next year.
Until we have greater clarity on the economic outlook it is unlikely that there will be any dramatic change in the country property market, with little motivation for people to buy or sell. There is a school of thought that the arbitrage between the London and the country market will attract buyers looking to sell up in London. The reality is that whilst job security remains low, most employees will want remain in London to be closer to their desks, so it will be interesting to see whether this will be the case in 2013.
The market will continue to be fragmented with country locations popular with international buyers, as well as absolute best in class properties, continuing to achieve high asking prices. Buyers need to ensure that they fully understand the property market in their chosen area as it is very easy to get it wrong and miss out on a great opportunity as a result.”
George Wade, partner at independent buying agents Property Vision, comments on the south west market:
“I predict that we are in for a bit more of the same in 2013; the best in class properties will sell well and in many cases higher than at the peak of the market and properties with a blight will sell but at a reduced price.
In the south west, demand for second homes has reached an all-time low. Buyers still view second homes as a discretionary purchase and until the property market show signs of a significant recovery it is unlikely that there will be any increase in demand. Since the peak, prices for second homes have fallen by as much as 20-25%, again the best class continue to outperform the market.
There is still a large gap between buyers and sellers expectations. If you look back over 2011 and 2012, the properties that sold best were priced to sell and to generate as much interest as possible. In reality in this market competition is very comforting for a buyer.”
