Sales:
Richard Barber, partner in residential sales at W.A.Ellis, comments:
“The ongoing weakness of Sterling continues to drive ‘safe-haven’ flow into the prime central London market in spite of higher rates of stamp duty and more punitive tax legislation.
When it comes to the property market, there tends to be a focus on achieved values, rather than transaction volumes, but our experience in the prime sales market suggests that transaction levels have moved on significantly since the bottom of the market in 2008. We’ve seen a 39% increase in sales transactions over the past five years, and our figures also show a 69% increase in values since the market low half a decade ago, which supports Mark Preston, CEO at Grosvenor’s findings.
He warned that prime house prices are now 53% higher than in 2008 / 2009, and that this growth is “probably” unsustainable, because “values in prime London are just extremely high by historic standards.”
A shortage of quality stock has been evident over the last few months, and no doubt new instructions coming to the market will captivate strong interest from purchasers. We have recently launched some outstanding properties, including an elegant Grade II Listed house in the heart of ‘Old Chelsea’, a key house in the centre of Paultons Square, and a beautifully proportioned maisonette in Ennismore Gardens.”
Lettings:
Lucy Morton, senior partner and head of lettings at Prime Central London estate agency, W.A.Ellis, comments:
“There has been renewed activity in the lettings market, with both our under offer and completion rate increasing by 50% in one week. Rates per square foot are becoming more of a valuation tool in the lettings market, with the range in rates per square foot within the prime central London postcodes ranging from £45 for our prime properties, to £95 per sq ft for our super prime properties.
We have launched some outstanding properties onto the lettings market recently, including a fantastic first floor lateral apartment in Eaton Place that houses an incredible art collection. We are confident that these properties will let and sell over the coming weeks due to the increasingly strong demand.
It is essential that properties are priced correctly, as some of our landlords have been experiencing a drop in rent when re-letting vacant properties which have had the benefit of fixed annual increases from previous tenancies extending for three to four years. Some of these outgoing rents are marginally above the current market value.
There is an emerging trend of tenants purchasing their rented properties from landlords, as some of our clients prefer to sell to a ‘safe bet’ rather than launching their properties on to the open market. The stock that has moved over from the lettings market to the sales market has created a shortage of family houses.
As such, we are advising our corporate tenants not to leave their search for family homes too late into the spring/summer when the stock levels could become worryingly low, and are also recommending that our investor clients purchase family houses, as we believe that rents will rise in this sector of the market.
Governor of the Bank of England, Mark Carney, has indicated that interest rates could remain at 0.5% for the foreseeable future. We hope that this will encourage investors into the buy-to-let market, as there has been a trend whereby some of our long-term landlords are selling and cashing in on capital appreciation.
Unfortunately, yields at this level remain low as the increment in lettings values has not kept apace with capital values. Hammersmith & Fulham saw the largest annual price rise according to the Land Registry, with 15.3% increase year-on-year. However, rents have only risen by circa 5% in the Borough, with this disparity leading some to question the outlook for yields in prime central London through 2013.”
