Cluttons Residential Market Outlook, September 2019

Price corrections leading to an increase in buyer enquiries

• Across the capital, the average price of a property is back to a level last seen at the start of 2016. In prime Central areas, prices per square foot are now comparable with five years ago
• Quarterly price falls now less than 0.5% in 10 Core London markets, with prices static or increasing across six. A year ago, price falls exceeded 2% in 11 Core London areas
• £1 million to £3 million market across prime central London performing well, with an 18% increase in sales during the first half of 2019 compared to a year ago
• Buyer enquiries are on the up, with high levels of interest, but still a way to go to reach normal market levels
• Super-Prime boost - twice as many super-prime (+£10m) deals have complete in the Q2 2019 compared to a year previously across prime Central London, as buyer discounts for overseas purchasers have been pushed to record highs
• Demand for rental properties remains strong across the capital. A supply-demand imbalance is fostering the return to rental price growth in many markets, with prime lets at record levels
• Rental price values across the capital are up by 0.9% per annum compared to a 0.2% fall at the same point a year ago.

James Hyman, head of residential agency at Cluttons comments:

“Whilst Brexit is the main predator in the super prime market, for the sub-£1.5million market affordability assumes that role. Every location has a price point, and areas where the market has readjusted to such levels are bucking the London trend.”

“We are experiencing close to ‘normal’ market conditions when to be marketing a property priced in line with where the true value sits. A property marketed at 20% off the highs of early 2015 will see immediate viewings, several offers and sell within a sensible time frame.”

Below are two examples of well-priced properties that Cluttons have recently brought to market. James comments: “It is important to note these are not fire-sale prices but true market value from realistic sellers who want to sell their properties in a realistic time frame.”

Merchant Court, Wapping, E1W

2-bedroom, river fronted apartment on the market for £1.15m (would have been £1.45m in 2015).

Tunnel Wharf, Rotherhithe, SE16

2-bedroom apartment with water views on the market for £895,000 (would have been £1.5m in 2015)

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Cluttons Residential Market Outlook, June 2019

Brexit continues to dominate the headlines. Resilient buyers sought to close deals across the capital before the 29 March deadline, others are watching and waiting for a clarity and certainty that, despite the extension, remains elusive.

• Annual price growth across London during Q1 at its lowest level since 2009
• Price negotiation remains a significant factor – properties selling for an average 11.5% discount on asking price
• Sales volumes down 4.3% on a year ago
• A supply demand imbalance points to an uplift in rental prices in coming months, annual rental price growth at its strongest in 16 months
• For Central London, Cluttons anticipate a 3% fall in values over the course of the year but confidence to return once the uncertainty recedes
• Except for 2019, Cluttons expect London to outperform the UK during 2020-2022
• Cluttons anticipate rental price growth will outperform sales across Central London in each of the next four years with cumulative growth of 7.6%

James Hyman, Head of Residential, Cluttons comments:

"We are beginning to see more activity out there but only at the right price. Sellers who are prepared to price their properties sensibly will get offers.  For example, we marketed three properties last week at 15-20% lower than the original price – within 48 hours we had multiple offers. 

"There has been a lot of discussion about the recovery of the London property market once there’s a resolution to Brexit.  This simply won’t be the case.  There’s effectively three years’ worth of people who haven’t put their house on the market, creating a ‘Brexit bottleneck’ which will lead to a sharp correction when they do.

"If people are serious about selling, they should market their properties now to beat the rush of supply. However, they do need to be realistic about the price - nothing has changed in terms of affordability. Buyers haven't suddenly got bigger salaries and they still must contend with the tighter lending criteria imposed by the CML."

Waterfront special topic highlights: 

• One in fifteen properties sold across London in 2018 was situated within 100m of the Thames with an average price premium of £270k which is virtually half the average price of a property across the capital 
• Despite market conditions the premium for waterside property in London has strengthened (23% over the past five years)
• It is not just riverside, waterside properties elsewhere in London also command large premiums (Chelsea Harbour 287%, Paddington basin 103%, St Katherine's Dock 50%) 
• 1 in 10 of London's waterside properties are within London's protected vistas, such properties, on average, sell for twice the price of those that are not. A premium of 124%
• Average prices of waterside properties within London's designated protected vistas have exceeded £1m since 2014, prices in 2018 £1.6m
• The price differential for living close to the river on the South is considerably higher than the North 
• Prices on of waterside property in the South have witnessed a more rapid growth, increasing 31% in comparison to 23% in the north. New build property have seen even greater growth, breaching the £1m threshold, up 40% since 2014
• As areas of the South riverbank now rival their northern counterparts on price, connectivity and accessibility, London is witnessing the emergence of a new prime residential enclave - indeed should South Bank now be included as Prime Central London? 

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The majority (65%) of the UK’s commercial landlords have undertaken work to improve the digital connectivity of their buildings, with almost three quarters (72%) of tenants saying that poorly connected offices will become obsolete spaces.

As our dependency on technology continues to grow and the digital infrastructure needed to support this constantly changes, are we investing enough to ensure London is future proof?

Over the last year or so, we have strived to gain a better understanding of how important connectivity is when it comes to attracting - and keeping - tenants long term. Our latest research has helped educate landlords and occupiers on the subject of digital connectivity - it's importance, how it is achieved and now we want to look to the future. 

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