For anyone on the lookout for higher end investment properties, the Financial Times today suggests there is currently a sale on in exclusive London postcodes. Over the course of 2017, properties advertised for sale in the most upmarket neighbourhoods of London went for an average of 10% under their asking price. The gap is currently wider than it was even during the immediate aftermath of the financial crisis in 2008 and 2009.
LonRes, a data company covering the higher end of the London property market such as Kensington and Mayfair, Canary Wharf and Hampstead, told the FT that ‘relatively cheeky’ offers were increasingly being accepted by sellers. Marcus Dixon, the company’s head of research put this down to a combination of buyers becoming increasingly confident that the power balance has notably shifted towards them and sellers are subject to ‘creeping realism’ around what they can expect under current market conditions.
Neighbourhoods where pricing is just below that in the most exclusive areas, such as Canary Wharf to the east of the centre, Richmond to the south and Hampstead to the north saw average discounts of 9% over the course of last year. Across prime London prices were recorded as being 5% below their 2014 peak, a decline that widens to as much as 11% in the most expensive postcodes.
Transaction numbers were also down 3.6% on 2016 levels as sellers not facing pressure to sell withdrew their properties from the market rather than accept the lower offers being put in. Quotes attributed to owners and partners at real estate agencies specializing in prime London areas back up the LonRes data. Roarie Scarisbrick, a partner at Propertyvision told the Financial Times:
“It’s becoming obvious that you don’t set foot in the London market unless you really need a London house.”
And Charles McDowell, owner of another upmarket agency:
“Sellers are saying, ‘if I get a buyer at a reasonable level, I’ll do a deal’.”
One exception to the trend is foreign buyers seeking to take advantage of the fall in the value of pound sterling since the Brexit process got underway. However, even this profile of buyer is ready to negotiate hard at present.
Mr Scarisbrick also doesn’t see any near term catalyst that will drive the premium market out of its current doldrums. Investors operating at the exclusive end of the market look like they may have a window of potentially a couple of years during which to strike high end London bargains on investment properties.
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