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November 2018 Newsletter

Here is our latest round up of the current talking points in the London property market.  

Watchlist:

As we are slowly progressing towards Britain’s exit from the EU in March next year, even though a Brexit deal has not yet been finalised, we are seeing more and more buyers entering the market with a view to snapping up keenly priced properties.

London not so expensive – Despite rises in Stamp Duty, London still compares favourably with other global cities when it comes to the costs associated with property ownership. London was ranked 9th out of 15 global cities in order of descending expense.  More expensive cities include Hong-Kong, Singapore and Tokyo, as expected, but also Paris, Berlin, New-York, Vancouver and Sydney. This research was based on a $2M property purchased by a foreign buyer used as a second home and held for five years. (Savills and FT) 

Love the High Line? The Low Line is coming your way along the 851 brick arches that run the 3.45 miles from London Bridge to the Greenwich railway viaduct. Pockets of development can already be seen along the route, for example the Biscuit Factory at Bermondsey, the train station at Deptford and the nearby Paynes & Borthwick development. Meanwhile the extension of the Bakerloo line to New Cross has been given the go ahead and will run underground virtually parallel to the Low Line.(ES)

Buying a new build property has always had some risk attached to it. There are parallels to buying a new car, there is often some immediate depreciation post purchase. This makes it all the more important to drive a hard bargain at the outset. In central London, a large proportion of these new builds have been bought in recent years by overseas buyers but with rises in stamp duty and current concerns over Brexit this demand has slowed considerably. A reduction in demand that could get worse as supply looks set to increase : in 2018, 7% more units are in planning or under construction than in 2016. There could be some good bargains around the corner. (FT) 

Muswell Hill  bucking the trend – Over the past year, prices in Muswell Hill have gained 3.3 per cent, compared with a fall of 1.6% in the so-called “prime fringe London”. (Hamptons FT).  Muswell Hill is perceived as having excellent local schools, good family houses, and although it is not on the tube network it is within easy reach of Highgate.

Brentford regeneration – Long seen as a non-descript industrial backwater by the Thames, Brentford in now in the middle of a transformative, multi-billion makeover.  One of the distinctive features of Brentford is its waterways.  As well as the Thames, the River Brent and Grand Union Canal run through Brentford, supporting thousands of new waterfront homes.  A new football stadium for Brentford FC, a new marina and various other infrastructure improvements, such as a cycling path, will further enhance Brentford’s profile. (ES)

Richmond the Nimbyest? – The Borough of Richmond upon Thames approves an average of 31% of planning applications, compared to a London average of 86%, drawing accusations of Nimbyism (Not In My Back Yard).  Richmond’s residents tend to be older than average and more likely to own their home than the average London Borough.

Value pockets – as illustrated above with Muswell Hill and Brentford, we continue to see pockets of value in the London property market.  There are not limited to new, less established areas, but even within established areas, some sub-pockets of a couple of streets can be more attractive than others, due to specific location factors.  One such factor is the proximity to “Ofsted outstanding” schools, which adds an average of £85,000 to a property compared with a “Ofsted good” school.(FT)

Numbers:

Remortgaging and equity release schemes – The outstanding value of all residential loans in the UK, mid-2018, was £1.4 tn.  This compares with a total residential equity value of £5.3 tn.  This relatively low debt to equity ratio together with low mortgage rates has encouraged homeowners, particularly in London and the South East, to remortgage their properties.  They have done so to fund home improvements, school and university fees, and help their children get on the housing ladder.  (FT)

Help to Buy – Time to Go?  – Help to Buy was originally set up to solve the problem of high house prices. It may have instead stoked demand for low-quality housing, pushed up prices across the board (house prices are up 30% since its introduction), helped 32,000 Help-to-Buy buyers climb the ladder rather than simply get on it, and possibly lined the pockets of housebuilder executives and shareholders.  At a cost to the tax payer of over £9bn (MW).  However the Help-to-Buy scheme was extended to 2023 in the 29 Oct 2018 budget.

Density of dwellings:  Kensington and Chelsea has the highest density of dwellings in the capital, with 7,047 per sq km, compared to Richmond Upon Thames which has one of the lowest density, under 2,000 per sq km. (FT)

The Market:

Off-market properties – Some 30% of UK homes sold in the last year for more than £1m were sold off-market. (Hamptons/FT). With the current uncertainties over property prices, and sellers’ and buyers’ estimates of home values often at odds with each other, more agents are resorting to “off-market” marketing.  In these situations properties are directly marketed to a small number of targeted buyers, with no internet or other traditional marketing media exposure.  This process enables the market to, very discreetly, find the optimal price for a property and avoid published adjustments and reductions for everyone to see on the internet.

London’s infrastructure:

The Tideway Tunnel, London’s £4.2Bn super sewer project, due to complete in 2022, will run 15 miles from Acton in the West to Stratford in the East. It will prevent 39 million tons of raw sewage from seeping annually into the Thames, by channeling the sewage to a treatment plant in east London, all this 60 m underground. However its impact will also be felt at ground level, with the construction of seven paved, pedestrian feature “platforms” along the way, at Putney Bridge, Albert Bridge, Chelsea Bridge, Nine Elms, Victoria and Blackfriars Embankment and Shadwell.

We very much hope that you find this update concise and informative. However please do let us know if you would rather we did not send this to you.

Regards,

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Jane Wood
Founding partner