Sterling is weak, the sun is strong and as predicted last month, we are busy securing a variety of properties for those taking advantage of sterling’s weakness.
I should add that if you are looking to buy and own your property for many years, trying to read the market on a monthly, weekly or daily basis is a waste of your time and money. You are best off trying to buy the best you can and pay as little as possible for it.
With that out of the way, there has still been plenty of chatter in the press about the future of London and the cost of owning property here. From speaking to a mix of clients, developers, estate agents and journalists over the last month, there seem to be 3 distinct views.
1. London is doomed, will become a shadow of it’s former self and is entering a period of terminal decline.
2. London’s future is uncertain and much will depend on the way negotiations with the EU go.
3. London remains one of the best and safest places to live, dine, study, work or retire.
If you believe 1, then there is no point reading any further, sorry.
If you believe in 2, then you are probably in a ‘wait and see’ mode which is totally understandable.
If you believe 3, then you are probably hoping to acquire London property at a discount right now, especially if you are converting from a currency that has gained against sterling in recent weeks.
The majority of people are in camp 2. We have been here before of course. During 1998 – 2000, we had the collapse of the ‘Tiger’ economies, Russian bond default, Long Term Capital Management’s $125bn collapse and the dotcom crash to contend with. In short, there is always a reason to ‘wait and see’ and there always will be.
This is all positive and shows that we have a normal, functioning property market. We are not in a 2008 scenario when people were in panic mode and all lending seemed to dry up overnight. We do not have queues outside banks and major institutions are not collapsing. Most that I speak to are working hard to take advantage of the current market and those that may have overstretched themselves.
If you decide to ‘wait and see’ before buying your next home or investment, you will end up paying more than if you act today. Having said that, I still see huge numbers of overpriced properties coming to the market each week. Basements are regularly being priced only 15-20% lower than equivalent properties on higher floors and many flats without lifts are being priced far to high. I say this because the market for ‘walk-ups’ and basements is far smaller than people realise.
For sure, there is uncertainty at the moment but this is the time to act and take advantage if you are able to. If you wait for the EU and the UK to agree departure terms, you will pay more, not less. What the press largely fail to realise is that there are very few forced sellers in London. Most owners are sitting on huge amounts of equity. Markets only correct severely when there are waves of sellers and due to central banks meddling, interest rates are set to stay low so even those who are leveraged have little reason to become forced sellers.
Sadly the only forced sellers I see today are those beginning with a D – death and divorce. When these properties come onto the market, they are usual priced to sell and they are selling very, very quickly. Conversely, I know of properties that have lingered on the market for over a year, but they are typically basements, walk ups and all are simply overpriced. They will remain unsold until they are reduced sufficiently. Their owners will probably curse the London property market for the remainder of their days but in truth, they bought an illiquid asset.
Where are the discounts right now?
The best deals at the moment are from certain high end developers. Private owners have no reason to accept low offers so if you are bargain hunting, forget it. However, I know of several high end developers who have final units they wish to sell so they can complete their projects. Once these are sold, they can sign off on the project and move on to their next one so they are incentivised, not forced, sellers. I know of several situations like this at a wide spread of price points, from £550,000 new build studios on the river to an £18m penthouse over looking Holland Park. All are the final units of larger projects and all are priced fairly.
To take advantage of these specific opportunities, you need to have your finances arranged and be prepared to act quickly. Please get in touch if you would like more information.
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