Market Insights February 2024

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

As always, the team and I would be delighted to discuss any property search or property management requirements you may have.

Best wishes

Jo Eccles & The Eccord Team

Founder & Managing Director, Eccord

+44 (0) 20 7244 4482

jo.eccles@eccord.com

LinkedIn

Genuine sellers versus the rest

The increase in positive sentiment we reported at the start of the year has continued, with new client enquiry levels throughout January and February three times higher than during the same period last year.

This trend is evident across the prime central London market, with agents reporting notable increases in both new buyer registrations and sales valuations. Whilst this is encouraging and the market is cautiously optimistic, it’s too early to say whether this improvement in sentiment will translate to a meaningful spring bounce and an increase in actual transaction levels.

Buyers remain price sensitive and are still unlikely to view or engage with properties they believe are overpriced. A crucial part of our role, particularly in the current market, is helping clients determine which properties are fairly priced, which sellers are sincere and motivated to sell, or where there is opportunity for serious negotiation - versus situations where sellers remain stubbornly unrealistic about the price they will accept.

Our forensic knowledge of the market and network of contacts means we focus our attention on legitimate buying opportunities and steer our clients away from properties where the vendor isn’t serious about selling.

We are seeing a certain amount of seller fatigue setting in, where properties have been listed and relisted a number of times over the last 12 months, either because the desired price hasn’t been achieved or because transactions have fallen through. This is presenting opportunities for buyers, but a great deal of tact and sensitivity is still required in order to positively engage a seller in productive negotiations. 

Wild card properties challenge client expectations

In the last year, 70% of our buying clients had tried unsuccessfully to buy independently before appointing us. It’s quite common for buyers to think certain characteristics are really important, only for the order of priority to sometimes change as our process of working brings order to their search and enables them to clearly understand the different permutations of what exists and what they can feasibly buy.

Where appropriate, we include a carefully considered ‘wild card’ in our property tours, which might be in a new location or a property that is entirely different to the others they have seen, bringing a fresh perspective to their search. Nearly 30% of our clients go on to buy a wild card option, highlighting the importance of our role in constructively challenging client expectations and advising them on all the options available.

We worked with a family with three young children who were living in a Chelsea property that was too small for them. They were wedded to Chelsea as an area and had searched unsuccessfully for over a year before appointing us, but there was a clear disconnect between the vertical living realistically offered by Chelsea’s terraced streets and their preference for lateral living space.

As a wild card, we showed them an off market old rectory just south of the river on the edge of Battersea Park. It offered incredible lateral living space and a much larger garden than Chelsea houses provide in their price range. They recognised it suited them much better as a family now and for the long term, and having secured it for them, they are happy in the knowledge they will never need to move again.

This is a good example of the importance of constructively challenging existing presumptions as a buyer and understanding where acceptable compromises can be made versus genuine red lines.

Rental market supply increases

The supply of rental properties – particularly in the core flat market – is rising steadily due to a relatively subdued sales market, where low transaction volumes and underwhelming sales values are leading more sellers to explore the rental market as ‘unintended landlords’.

Reports suggest a 41% increase in the number of homes available to rent in London in January 2024, compared to last year. For tenants, this means more choice and less pressure to make a decision quickly.

Landlords, on the other hand are facing a disjointed market, with certain properties letting quickly and others gaining little traction. Rents are stable, but landlords are having to be responsive to price changes if needed, to reduce the risk of void periods.

We continue to see a general consolidation of personal affairs across the property sector, with owners keen to sell properties which are surplus to requirements. This simplification of assets is a trend which is also being reported by private banks and across other investment classes.

The timely disposal of rental properties is a recurring conversation with our landlords as tenancies conclude and they take the opportunity to test the sales market. However, a lot haven’t achieved the capital growth they were hoping to achieve (as many values remain below the 2014 peak) and so are returning to rentals for the time being.

Whilst momentum may be slowing, we are seeing some new entrants to the landlord market - albeit it in relatively low numbers. For example, we are working with an American family office which already has a large prime residential portfolio in the United States and now wishes to begin building a London portfolio of similar size and stature.

For investors who are willing to take a long-term view, London’s reputation as a global safe haven with rigorous financial and legal systems, ensures it continues to compete as a destination of choice for global HNWI and UHNWI. Our reliable litmus test of London’s appeal and vibrancy is how busy the members’ clubs and restaurants are and the feedback from black cabbies on how many tourists are visiting in the city.

My interview with Barclays Private Bank

It was a pleasure speaking to Barclays Private Bank about optimism returning to the UK property market.

A disconnect had existed between buyer expectations and seller demands, limiting transaction flow, and last year many of our clients held back waiting for market stability. But they are now planning purchases with a firmer commitment to action, and we are also seeing international interest returning.

Read the article here.