Newsletter December

Newsletter December
09
Introduction by William Carrington
Website design and hosting
A walk through London by Keith Rigby
Statistics by Harriet Black
Market predictions
lonres.com | Newsletter | December 2009
Introduction by William Carrington
As the year draws to a festive end, I am compelled to comment upon what has been a remarkable year for the central London
property market. At the beginning of the year, there was a great deal of uncertainty as to the direction it would follow, and we
now know that its rise has been relentless. Prices appear to have reached the levels of the first half of 2007, but stock levels
are worryingly low. We are listing less than half of that at the same period last year.
The main difference must be interest rates. Base rate trackers and fixed rates of 1.99% as opposed to 5.39% two year ago
have been a major contributory factor in the latest mini boom, which must be unsustainable. Do those buyers have a getout plan, and does that mean we will have replacement stock in a couple of year’s time? What is certain, is that global and
economic events of this year have not impacted upon the needs of property buyer.
Many people have commented that it will be the election next year that will change things for us. Why should it? More of the
same from a tired incumbent government, or more of the same from the Conservatives? Will it be climate change?
Only as part of a range of increased taxation measures. Two things will affect the buyer next year: the downward
reassessment of UKPLC’s credit status will have a profound effect on our ability to repay our borrowings; so interest rates will
begin their upward creep, and the second item will be the inevitable tax rises that will begin to bite in the second half of next
year.
It is my belief that these two issues will affect our market in the next 12 months. The “when” is where the money is made!
Anyway, it’s Christmas time and we should celebrate that and the resilience and professionalism of you, our subscriber’s.
Happy Christmas to you all.
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lonres.com | Newsletter | December 2009
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2
lonres.com | Newsletter | December 2009
A walk through London by Keith Rigby
Live local, work local, love local:
At Bective Leslie Marsh the vast majority of the staff in the
North Kensington branch, including myself, work within a
stones throw of the office on Ladbroke Grove. Over the years
I have lived here I have been immersed in the areas colourful,
community life, worked in the heart of North Kensington and
brought a family up here. It has been extremely interesting to
see first hand over the past twenty years how dramatically the
area has progressed.
North Kensington has not always been as popular as it is today,
over the past few decades much of the area fell into disrepair
with the crime rate rising and the property prices slumping
dramatically. It was not until the mid nineties that the area was
rejuvenated and a new influx of buyers came to North Kensington,
raising the profile and desirability of the area.
Conserving the Capital:
A large section of North Kensington is made up by the St Quintin
Estate Conservation area. On the 24th February 1974
Since moving to North Kensington I have seen a vast
improvement in a number of sectors. The crime rate has
dropped considerably and various areas which once were
renowned for being dangerous have been regenerated.
These changes have made way for the introduction of
trendy, independent boutiques and shops, along with
popular gastro pubs and quaint coffee shops. The area has
become extremely family orientated with excellent schools
and opportunities for children in terms of extra curricular
activities. These include the local under 18’s football team
The Kensington Dragons who are sponsored by Bective Leslie
Marsh.
The area has gone from strength to strength with a
regeneration program put in place to restore many of the
buildings to their former glory after a number of years of
neglect.
the Kensington and Chelsea council received an application from
the estates residents association requesting that the area be
deemed a designated conservation area. The request was initially
put forward to protect the site from the potentially harmful
influences of the Channel Tunnel terminal which, at that time, was
planned for White City.
One of London’s most famous markets, Portobello Road adds
to the popularity of the area attracting both locals and tourists
every Friday and Saturday. It has retained much of its authenticity
and there are a number of beautiful antique and jewellery stalls
which have been handed down through generations.
The Property Scene:
History:
Prior to the early 1790’s the majority of North Kensington
was made up of two adjoining farms- Portobello Farm and
Notting Barns, the latter of which belonged to Thomas Darby
of Sunbury and was the earliest record of occupation on the
site. The first major residential building work commenced
between 1860 and 1879 when the foundations for Cambridge
Gardens, Oxford Gardens and Bassett Road were laid. The
first houses to be built on the estate were 60- 68 Cambridge
Gardens which are three stories in height with centrally placed
doorways flanked by columns and bay windows. In 1862
Charles Henry Blake acquired 130 acres of land adjoining the
estate and more building took place, thus expanding the built
up area.
Things have certainly changed dramatically in the past few
decades in North Kensington and this is reflected in the property
prices. During the mid nineties £350,000 would have bought
you a four bedroom house where as today we are selling similar
property for £1.1 million.
There is an eclectic cross section of residents in North
Kensington which adds to the unique personality of the area;
from the bohemian Notting Hill crowd to high net worth, high
powered, well heeled bankers and lawyers. The area has been
home to various celebrities including Dusty Springfield, Sophie
Ellis Bextor, Rik Mayal, Jason Donovan and David Cameron. This,
along with the rising property prices and the increasing number
of commercial businesses, including Stella McCartney, Designers
Guild and Sigerson Morrison have been established in the area,
highlights the ever growing popularity of W10.
Keith Rigby, Director.
126 Ladbroke Grove, London, W10 5NE.
[email protected]. 020 7221 0330
3
Sa
le
s
lonres.com | Newsletter | December 2009
An overview of London’s housing market by Harriet Black
Polarised housing market growth in first 3 quarters of 2009
Average values of properties sold across London
2007
2008
2009
£5,000,000
£4,000,000
£3,000,000
£2,000,000
£1,000,000
£0
1
Source : Nationwide
Change in new instructions across London
2
3
4
Source: LonRes
5
6
7
8
9
Source : Lonres
Change in supply in different locations across London
Q408
Q109
Q209
7
8
Q309
400
1200
1000
300
800
600
200
400
100
200
0
Feb- May- Aug- Nov- Feb- May- Aug- Nov- Feb- May- Aug- Nov07
07
07
07
08
08
08
08
09
09
09
09
Source : Lonres
0
1
2
3
4
5
6
9
Source : Lonres
Given the scale of economic events at the end of 2008, few would
have predicted that just over a year on the UK residential market
would be showing genuine signs of the beginning of a recovery.
Supply has been one of the key drivers of 2009 with the
lack of new instructions providing a degree of support to the
housing market.
Whilst technically we remain in recession, the prospects of a
global depression have all but disappeared and the low interest
rate environment has improved many households’ affordability.
In its latest housing market survey, the RICS reported a small
increase in new instructions in recent months. Looking at
LonRes statistics, supply across London peaked mid-2008
before falling consistently over several months. There has
been a small amount of recovery recently but new instructions
are still well below the monthly average seen in 2008.
Housing market data released over the last few months has been
overwhelmingly positive. At the end of the third quarter, average
values in the UK as a whole had risen 1.3% while in London
growth stood at 3%. Although there was initially concern that the
market in London and the South East would be hit hardest given
the exposure to the financial sector, these areas have been the
first to stage a recovery with cash rich individuals and investors
leading the way.
In London there is still a significant mismatch in supply
and demand. One result of this mismatch is the level of
competition for properties and many agents in our monthly
survey have reported an increase in multiple bids.
Area definitions:
1. Knightsbridge, Belgravia, Mayfair, 2. S Kensington, W Chelsea, 3. Chelsea, 4. Kensington, Holland Park, Notting Hill,
5. Marylebone & Medical Territory, Bayswater, 6. Pimlico, Victoria & Westminister, 7. Hampstead, Regents Park, St Johns Wood,
8. Earls Court, 9. South of the River
4
Sa
le
s
lonres.com | Newsletter | December 2009
Residential property transactions levels have increased
Source : HM Revenue and Customs
Confidence in the housing market has improved in recent
months and as a result transaction levels have started
to recover. In the three months to October, the number of
residential transactions increased by 22.1% on a year earlier.
Despite a recovery in mortgage approval levels, the mortgage
market continues to be restricted. Even with the consistent
increase in approvals, current levels are still barely over half of
the long-run average.
Much of the demand for housing has come from cash rich
individuals. Many people have favoured residential property
as an investment over the last year as most alternative
investment opportunities have not been that attractive. For
foreign investors the weak currency provided further incentive.
r
tive fo
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Investm roperty
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fur
Proportion of lots sold at auction in latest quarter
Source : EIG
As a result the prime housing market in London has
seen strong demand and consequently the market has
outperformed other parts of the UK.
This investment buying theme was reflected in our agent
survey where around 80% of respondents cited investment
as one of the key buyer motives.
Auctions can be an interesting housing market indicator.
Recent data from auctions further highlights this
investment motive. In a survey of buyers at Allsop’s
residential auctions this year, 93% of purchasers were
private investors.
Data from EIG (Essential Information Group) on auctions
shows that the take-up rate at auctions has increased this
year (up 16% over the last year) with especially strong
demand seen in London.
Sentiment towards the residential market certainly seems
to have improved. Indeed, according to our agent survey,
there was a distinct improvement in sentiment in the last
few months of the year.
We would, however, still recommend a degree of caution
looking ahead into 2010. There is still some uncertainty
over the length of time it will take for the economy to
recover. We do not believe that property values will, in the
near future, improve at anything other than a steady rate.
5
Sa
le
s
lonres.com | Newsletter | December 2009
Your Market Predictions for Sales 2010
“As onerous tax rises kick in and demand
from cash rich buyers runs out the ‘recovery’
is likely to stall in 2010. Nonetheless, with
poor investment returns elsewhere the
central London property market is likely to be
supported by continued demand from overseas
buyers although we anticipate very little growth
if any and in certain instances, prices could
drop by up to 5%”.
Mark Pollack
Aston Chase
“2010 West End Central:
Popularity in the Fitzrovia/
Bloomsbury borders gets
stronger and stronger no
downturn envisaged”
NW3
“Steady improvement should
continue due to the shortage of good
properties.
We see competitive bidding resulting
in more sales being agreed and
even some sealed bids”.
Laurence Glynne
LDG
NW8
Rosy Khalastchy
Beauchamp Estates
NW1
WC1
W9
W2
W11
“With correct pricing, new
instrucions are moving fast,
which should continue if we, as
agents, don’t overprice to acquire
instrucions”.
W14 W8
WC2
EC4
EC2
EC3
SE1
SW7
SW5
Jane Kempsey
Wedgwood Estates
W1
EC1
SW
10
SW1
SW3
SW8
SW6
SW11
SW15
SE1
“If Battersea Power station gets the
planning permission and building
work commences then SW8 may
finally become a postcode that
means something to the masses and
will hopefully attract the premium it
deserves!”.
Charlie Garton-Jones
Garton Jones Real Estate
SW18
“Whilst many of our competitors
believe the market may yet dip
some more in 2010, (figures of
course differ, but 5-10% seems
to be the consensus) We actually
believe that prices will remain
stable and any increase in stock
levels will not have an adverse
affect and 2010 will not differ
markedly from the last of 2009.”
David Cleary
Winkworth & Co
“Continuing low stock levels forcing prices
to ever higher unsustainable levels. Mr
Brown’s rank economic incompetence
has left Britain with the worst deficit of any
major developed country and pay back time
is just round the corner!”
“We are expecting 2010 to be steady,
but unfortunately nothing too exciting.
The combination of higher taxes,
general election, and the slow grind
out of recession, will probably produce
a satisfactory but not spectacular
market.”
Seamus Wylie
Ayrton Wylie
Richard à Brassard
Courtenay
6
Le
tt
in
gs
lonres.com | Newsletter | December 2009
Change in new instructions across London
Average rental values
2007
2008
2009
£1,500
£1,200
£900
£600
£300
£0
1
Source : Lonres
2
Source: LonRes
3
4
5
6
7
8
9
Source : Lonres
Within the rental market, there has been a different
set of demand / supply dynamics to the sales market.
As the supply of property for sale declined, the number
of properties available to let increased with ‘accidental
landlords’ emerging as people decided to let out their
property rather than accept a below market price.
The increase in supply has started to ease over the
last few months with the level of new instructions falling
consistently. At the same time, demand has started to
increase. This pattern of demand and supply has helped to
stabilise rental values. (a trend also highlighted in the RICS
Rental Market Survey)
As a result of the increased supply, average rental values
eased. As seen in the chart above, the biggest fall in
rental values over the last year has been in Knightsbridge,
Belgravia and Mayfair.
This recovery in rental values is consistent with our agent
survey where two-thirds of the respondents were more
optimistic of the outlook over the next 6 months.
Who is Harriet Black?
Harriet brings to LonRes nearly 8 years of experience in the residential market
after working for Savill’s research department where she was responsible for
writing and publishing a series of highly respected regular research reports before
heading up the research operation at property search company Garrington.
Prior to working at Savills, Harriet spent 6 years in the City at investment banks
such as Lehman Brothers as a convertible bond analyst covering Asian markets.
As well as providing many interesting travel opportunities, this role involved working
closely with traders and sales people providing information and advice as well as
putting together detailed analysis on a broad range of companies and working on
corporate finance deals.
7
Le
tt
in
gs
lonres.com | Newsletter | December 2009
Your Market Predictions for Lettings 2010
“As a result of slowly returning confidence
in economy, falling ‘premium’ stock and an
increase of quality domestic and international
tenants. We believe we can certainly expect
higher levels of rent the first quarter of 2010,
and hope this trend will continue until the end
of the year”.
“We predict that after the erratic
lettings market in NW3 throughout
2009, 2010 will be busier with more
people on the move and prices will
start to increase as stock is quite low”.
Nicole Ratzker
Aston Chase
Helen Kovari
Admiral Property Partnership
NW3
“We have come through the
worst and in 2010 we plan
to build upon what we have
achieved this year”.
“The lettings market in W11 is certainly
competitive with prices rising due to
a decrease in stock. This is set to
continue into 2010 as the sales market
strengthens”.
NW8
WC1
W9
Keith Rigby
Bective Leslie Marsh
W14 W8
SW7
SW
10
SW6
WC2
EC1
EC4
Georgina Parker
Winkworth & Co
EC2
EC3
SE1
SW5
Terje Gilje
Farrar & Co
W1
W2
W11
“Falling stock levels and
uncertainties created by an
election year will serve as
a boost to rental values in
2010”.
NW1
SW1
SW3
SE1
SW8
“The return of the Corporate
Tenant – Enquiries from
corporate tenants and
embassies has significantly
increased with budgets ranging
from £800 to £2K per week.
W2 has seen stock levels
increase by 20% over the last
two months, ready for the new
year demand! ”.
Richard Davies
Chesterton Humberts
SW11
SW15
SW18
“Whilst there was a feeling of
uncertainty for this years rental market
it has not all been bad. If this activity
continues next year and we see
previous rental levels return we should
see a profitable 2010. All agents need
to stand firm on fees for 2010”.
“Demand will be high (applicant levels in our
Battersea Park office were more than 100%
up in November 09 compared to November
08) yet stock levels will come under pressure
as more people will decide to continue to rent
rather than buy, so tenants will have much less
choice and rents will consequently go up. In
our Northcote Road office we have seen a lot
of rental properties going onto the market for
sale, as landlords decide now is a good time
to sell due to the chronic shortage of available
properties to buy, thereby further reducing
number of properties available to rent.”.
Louise Good
John D Wood & Co
Virginia Skilbeck
Douglas & Gordon
8
We wish you a Merry Christmas
and a Prosperous New Year
lonres.com limited | First Floor | 37 Battersea Square | London | SW11 3RA
Telephone: 020 7924 6622