Camilla Dell, Managing Partner of Black Brick, comments: “In 2015, we expect many buyers will be awaiting the outcome of the General Election in May and the inevitable interest rate rise. The General Election poses more of a threat to the market as interest rate rises are likely to be slow and by small increments. In addition, with the Mortgage Rate Review, most owners are well insulated from rises way beyond what is expected for next year.
The effect of the election will be that estate agents will see fewer buyers in the market (one estate agency has already reported a 20% reduction in the number of buyers registered in August 14 compared to August 13), and vendors wanting to achieve a sale will need to be realistic in their expectations. It should therefore be a buyers' market, which we have not seen for many years. In fact, we are already seeing evidence of the market turning in favor of the buyer. Long gone are the days of the frantic “open-house” when buyers had to fight to see a property on a weekend, and by the Monday it had already gone under offer. We are also seeing fewer sealed bids, if any, and more flexibility from vendors on price.
Move to the Country?
“We foresee a big outflow of domestic buyers selling up and moving out of London. Many of them will have been considering this move for many years, but have held on as London prices increased and the market outside of London stagnated. The gap seemed to be growing ever wider, but with prices outside of London now playing catch up, the gap has narrowed. We expect to see demand increase outside of London as owners take last minute advantage before the gap closes completely, with a potential increase in the supply of stock in certain London areas popular with domestic owners such as Wandsworth, Fulham, and Clapham.
The market below £2 million
“The market below £2 million will be the least impacted part of the market in 2015, with virtually no threat from a possible Mansion Tax. Within prime Central London, prices are unlikely to fall, and could potentially increase as more buyers and investors choose to stay below this threshold. However, areas outside of prime, such as Wandsworth, Fulham, Clapham, Islington and parts of the City which have seen double digit growth this year, may be more vulnerable to a price correction. The rate of growth seen in these areas has been so rapid and in our opinion, is unsustainable in the long term, as the supply and demand dynamics in these outer prime areas are different to the golden postcode areas.
The super prime £10 million plus market
“The super prime £10 million plus market will be the most vulnerable to price drops in 2015. With several high-end new developments set to come onto the market, particularly in some of the golden triangle postcodes such as Mayfair W1 and Kensington W8, there is a risk of over-supply combined with reduced demand due to a threat of Mansion Tax and strengthening of sterling, meaning fewer international buyers who typically dominate this part of the London property market. On the positive side, for buyers looking to buy a super prime property, it is definitely a buyers' market – we negotiated £8 million off the asking price for a Belgravia home in this range recently, representing nearly a 15% discount from the asking price.”
