Market Insights October 2024

With now less than a week to go before the much-awaited Autumn Statement, below are the themes we have been seeing across the prime central London property market.

If you have any questions or would like to discuss the market in more detail, the team and I would be delighted to hear from you.

Best wishes

Jo Eccles

Founder and Managing Director, Eccord

+44 (0) 20 7244 4482

jo.eccles@eccord.com

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More buyers are proceeding than expected

Whilst many buyers remain firmly on the sidelines until there is clarity from the 30th October Budget, others are continuing as planned.

We have not had any clients withdraw or change purchase plans that are underway; in recent weeks we have exchanged contracts or are at final search stages for family house purchases in Putney and Hampstead, as well as a lateral lock up and leave in Notting Hill – all between £5m - £8m.

We have also commenced several new searches for buyers who are keen to press ahead, irrespective of the Budget details. These new active buyers are falling largely into three categories. 

Firstly, we have been approached by a cohort of buyers who have been proactively searching themselves over several months. In most cases they have come close to offering on a property, but haven’t had the confidence to make a decision alone without professional representation. They are seeking expert advice from a fully independent buying agent to know that the entire market has been opened up to them and expert advice has been received on pricing and negotiations.

Secondly, we have been re-contacted by a number of potential buyers who had previously considered buying and are now revisiting plans to do so in earnest. Numerous estate agents have reported the same – buyers returning to view properties which they had considered months ago but they are now more focused.

Finally, we are advising a number of buyers who are looking to start a brand new property search – many of whom are either entrepreneurs who have managed to close a company sale and liquidity event pre-budget and now have the certainty to buy, or families with children sitting 11+ and 13+ exams, who are moving to accommodate secondary education.

Price discounts aren’t visible

In the £5m+ price bracket, the number of price reductions rose by 39% between July and September, compared to the same period a year ago. At the same time, new sales instructions increased 32%, showing that while many buyers continue to sit on the sidelines, sellers are pressing on and listing their homes regardless.

The current imbalance between supply and demand means there are good buying opportunities to be had.

Some discounts, mostly on properties which have been on the market for some time and were overpriced to begin with, are visible. However, a large proportion of discount opportunities are not visible and can only be uncovered by building a clear picture of the property’s history and the seller’s circumstances, through leveraging our network and by approaching negotiations tactfully and intelligently.

For example, we have just exchanged on a house in Putney for £5.15m which was listed for £5.85m. We tracked the house for several months and whilst the seller became more motivated, he didn’t reduce his price to reflect that. By reading between the lines and approaching negotiations carefully and tactfully, we were able to secure a 12% discount for our client, who had been prepared to pay considerably more.

While it's a buyer’s market to some extent and there are plenty of good quality properties to choose from, sentiment on both the buy and sell side remains very delicate and there is a large contingent of discretionary sellers who simply won’t sell if the price and the approach isn’t right.

Increase in personal homes being rented out

With typical net yields in prime central London as low as 1 - 1.5%, the number of buy to let investors actively acquiring properties purely for rental purposes is now very small. Alternative asset classes such as government bonds are providing higher returns, with less responsibility and regulation.

Existing landlords within our portfolio, whose properties we rent out and manage for them, continue to weigh up their options, with some having sold up over the last two years.

That said, we are seeing a significant increase in new clients appointing our property management team to manage their personal homes, seeking to rent them out or retain as a lock up and leave, as they make plans to reside elsewhere.

Some are relocating for work or tax reasons, but wish to retain their London home in order to keep their options open and enable them to return to the UK in the future. We saw this in the wake of the global financial crisis when many hedge funds relocated to Switzerland and our property management team were appointed to rent out and manage their properties, or maintain them on an empty lock up and leave basis. This trend is now repeating itself, but not just within the hedge fund industry.

In every case where the property is a former personal home, the primary motivation of this new wave of landlords is ensuring only the highest quality tenants are selected for their homes. They value our rigorous vetting process, during which we personally interview every prospective tenant alongside detailed external referencing, to ensure only the best tenants are selected for their property. 

Please contact us if you would like to discuss any property management requirements. 

London estates are financially underwriting certain locations

We discussed with Bloomberg earlier this month the nuance of London, versus other global cities, having central freeholders in certain prime areas.

This has been fundamental in the transformation of Marylebone under the Howard de Walden’s careful stewardship, followed by Cadogan’s significant regeneration of Sloane Street and the Kings Road, and Grosvenor’s continued investment into Mayfair.

Other freeholders are now following suit, such as the Portman Estate trying to emulate Marylebone Village’s success. We discussed the ‘central freeholder’ factor and it being the closest thing to effectively underwriting an area and its property values.

To read the full article, please click here.