Market Insights June 2023
Please see below our June Market Insights, highlighting the key trends we have seen in the prime central London property market this month.
As always, the team and I would be delighted to discuss any property search, acquisition or property management questions or requirements you may have.
Founder & Managing Director, Eccord
+44 (0) 20 7244 4482
House sellers adopt a ‘take it or leave it’ position
The shortage of best in class family homes in central London’s most popular enclaves continues and transactions are down approximately 30% year on year.
In prime locations such as St John’s Wood, Notting Hill, Kensington and Chelsea, where homeowners are aware of buyer competition for the best properties, some discretionary sellers are sensing the opportunity to test the waters by listing quietly off market - but are only willing to progress if a price can be achieved that makes it truly worth their while.
We have seen several instances of sellers adopting a ‘take it or leave it’ position, naming premiums of up to 15% for genuine best in class, turnkey properties. In some cases, where the property is truly exceptional and beautifully presented, buyers are agreeing to pay premiums in return for immediacy and to avoid the uncertainty of time and costs associated with a refurbishment. In other cases, however, this approach is leading buyers to question the integrity of the seller and whether it’s worth entering into negotiations.
Where sellers are genuine and motivated, buyers are able to secure fair prices. We recently exchanged on a beautifully refurbished family house in Putney where the seller was relocating overseas and wanted a reliable buyer who could proceed quickly. We were able to secure the property for 10% less than the £4.2 million asking price.
This is a perfect example of the polarisation between motivated and discretionary sellers, where in some cases buyers are being forced into competitive bid scenarios while in others, a genuine discount can be achieved. Therefore, understanding the background of the seller and the history of the property is now more important than ever, in order to successfully navigate the market.
We anticipate the availability of genuine best in class properties will remain restricted throughout the summer and patience will be needed as negotiations continue to be drawn out and transactions take longer to complete.
Buyers commit a higher proportion of wealth to property
So far, there is very little sign of forced sales in prime central London arising from increasing borrowing costs. Rising interest rates are a consideration for every buyer who requires a mortgage, but many high net worth buyers remain committed to a purchase, despite the current inflationary environment.
Many have accumulated significant wealth over the last few years, having lived relatively conservatively since the start of the pandemic or having benefited from a major wealth event. They are therefore in a position to pay larger deposits or temporarily dip into savings to service higher mortgage rates if needed.
We are seeing increased willingness among buyers to stretch budgets and devote a higher proportion of wealth and income to property, in order to successfully secure the right long term home.
For example, we have had two clients with initial search briefs of £7m who both chose to stretch their budget and secure best in class, turnkey properties for £10m and £10.5m respectively. This demonstrates the financial flexibility we’re seeing among high net worth buyers, who are prepared to increase their budget for the right property.
Landlords contend with higher borrowing costs
During the first four months of this year, the number of prospective new tenants in prime central and prime outer London was almost 40% higher than the five year average, while the number of new listings over the same period was nearly 35% lower – a stark illustration of the current supply and demand imbalance.
Tenants and relocation agents face the ongoing challenge of good quality properties being secured within the first few viewings, creating pressure to view and make quick decisions as soon as properties hit the market, or to gain access before they are officially launched.
Landlords are equally under pressure with rapidly rising interest rates. Those with higher levels of borrowing are eager to increase rents to meet their mortgage commitments. We are securing an average rent uplift of 14% at review compared to 18 months ago, but for more highly leveraged landlords that isn’t always enough to meet their increased borrowing and service charge costs.
For those landlords who are choosing to retain their investment properties, we are highlighting the significant value of securing – and retaining – high calibre tenants who will care for the property, pay the rent on time and stay long term.
For those who have made the decision to sell, we are advising on the best sales agents to appoint to optimise a sale, and working closely alongside them to ensure a seamless transition to the sales market.
My guest column in The Sunday Times
I was honoured to be asked to author the House Guest column in The Sunday Times, advising buyers on how to successfully negotiate a property price discount.
Regardless of how experienced people are at negotiating in their own professional lives, buying a property can be very different to other asset classes due to the emotion involved and relatively few decision makers.
Our team have won 85% of competitive bid scenarios, even though in 65% of those cases, our clients were not the highest or strongest bidder. Personal reputation, buyer etiquette and rapport between both parties are all critical to achieving the lowest possible price.
Read the article here if you’re a Times and Sunday Times subscriber.
For 17 years, Eccord has been trusted by private clients, family offices and international companies to provide residential search, acquisition, relocation and property management services.
Our award-winning team has since successfully acquired over 400 properties and manages a portfolio of more than £1.5 billion of rental properties and private homes.
T: +44 (0)20 7244 4485