Market Insights August 2023

Please see below our August Market Insights, highlighting the key themes we’re seeing in the prime central London property market this month.

The team and I are on hand to help if you have questions about the market, or would like to discuss any property search or property management requirements. Please don’t hesitate to contact us.

Best wishes

Jo Eccles

Founder & Managing Director, Eccord

+44 (0) 20 7244 4482

jo.eccles@eccord.com

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Discount expectations remain high

Since the start of the year, we have seen an increase in discretionary buyers, both domestic and international, searching in the £2m - £5m price range for a pied a terre or London base. Some of these buyers are coming into the market with expectations of achieving discounts of up to 15% – 20% off last year’s prices.

They are entering the market expecting to hold all the cards but finding themselves disappointed. In the process of submitting unrealistic offers on various properties they are losing their credibility amongst sales agents.

With careful searching and tact, discount opportunities exist, but they require a strategic and considered approach. The key for buyers is to maintain personal credibility within the area you’re searching.

Encouragingly, needs-based sellers have started to price properties more realistically and we have seen several instances of estate agents refusing to take on a sales instruction which they believe is priced unrealistically high.

In our view, the lack of transactions remains largely price related, rather than demand related.

Buyers focus on lateral living

Lateral living continues to be the most common search request from our family house buyers with budgets up to £15m and we expect this to be a dominant theme as we enter the autumn market.

Buyers are prepared to be open minded regarding locations in return for large house footprints, and areas such as Chelsea, Kensington and St John’s Wood are continuing to draw buyers over from more vertical locations such as Notting Hill and Holland Park in this price bracket.

Whilst functionality is important and the need for a study (or two) remains high on priority lists, open plan kitchen, dining and reception space for informal living and entertaining is driving a lot of buyers’ choices and decision making.

Generous bedroom sizes are also a focus, for future proofing children’s needs, as family buyers commit to longer term moves. In many cases they are prepared to stretch budgets now to achieve this, to avoid the need to upsize in the future and incur associated stamp duty and moving costs.

In higher price brackets, clients are increasingly requesting a gym, pool, teenager spaces, a lift and accommodation for staff or aging parents.

Sellers in higher price brackets remain discretionary. On a recent property tour of 13 family houses priced between £15m - £18m, only one was a needs driven owner occupier selling; the remaining were all houses which are surplus to requirements and the sale is optional.

Transactions grow in complexity

Lengthy transaction timescales continue, with lenders much slower to issue mortgage offers combined with many buyers and sellers (and their lawyers) being on holiday, which is leading to slower decision making and response times.

Purchases are increasing in complexity too. Where traditionally buyers might have been willing to take a view on various matters that arise during the conveyancing process, reduced confidence in the market has brought a shift in mindset.

Our network of experts, from heritage and planning teams to architects and interior designers, tree and acoustic specialists and more, are proving indispensable as we consult with them to provide pre-exchange advice on points that may previously have been considered non-critical. This is requiring us to expertly manage pre-exchange due diligence and timescales, drawing in experts who will operate quickly and with discretion, in order to preserve confidentiality and avoid compromising our client’s position.

We’re also navigating our clients through negotiations on long and complex fixtures and fittings lists and other purchase conditions such as boundaries, potential construction costs and ongoing maintenance expenditure. This is in contrast to normal market conditions where we’ve seen a higher degree of urgency, with both sides usually more inclined to show greater flexibility or take a view in order to maintain momentum.

Despite the complexity, transactions are going ahead as planned, just with more pre-exchange diligence.

The importance of landlord and tenant experience

For landlords remaining in the market for the interim or longer term, they are focused on minimising costs and maximising yields. However, we are seeing few choose to self-manage, as there are now up to 160 regulations and responsibilities that need to be met by landlords, and therefore a continued commitment to having their properties professionally managed remains.

We have welcomed a number of new landlord clients to our portfolio recently who are seeking a higher quality management experience and in many cases, they have appointed us mid-tenancy.

The two main reasons cited by our newest landlord clients for switching to our property management team are a run of poor quality tenants, and inconsistent or inexperienced property managers. Portfolio landlords are also seeking to consolidate and streamline the running of their portfolio, by replacing a multitude of different letting agents and property managers with a single firm.

Landlords are realising that tenant experience is crucial if they’re to keep a good tenant for the long term and achieve rent increases of up to 15% or more. With tenants at home more, they are increasingly demanding and good property manager relationships are essential.

Lettings specialists and property managers need to work in close partnership to ensure they are aligned in sourcing and selecting high quality tenants at the outset, to pave the way for a smooth tenancy for the landlord and property management team. The benefit of a joined up letting and property management service cannot be underestimated when it comes to ensuring the long term success of a tenancy and maximising net yields for landlords.