Don’t buy a house now in London or in the south, said Times columnist Caitlin Moran this weekend. It isn’t a good idea and “you know this in your guts”.
I mentioned on Twitter at the weekend (you can follow me at @MerrynSW) that not everyone’s guts can take account of the effects of Help to Buy, the hangover from UK quantitative easing and five years’ worth of the lowest interest rates for 300 years. But look around London and it seems that some can.
I have a friend selling a flat on the Chelsea/Fulham border. It is wildly expensive, but nonetheless, when she put it on the market the estate agents said it would sell in seconds. That was four months ago. The agents say they are utterly bemused and that everything else is practically selling itself. I wonder if that is estate-agent-speak for not much property in prime areas is selling actually.
The FT today ran a story on the Ukrainian and Russian oligarchs rushing to buy property in the UK in an effort to get ahead of sanctions (mainly through companies so as to preserve their anonymity). But in general it seems that foreigners buying in London have quite effective guts: last week Savills sent out a report to clients noting that prime central London prices have “flatlined” – they have risen a mere 2% in the last three months – while ‘super-prime’ houses (£10m plus) are up only 0.2%.
This, says letting agency Benham and Reeves is all about price. “Yields have been crushed” and “capital values are too high”, so foreigners are leaving Zone One to look for cheaper properties in Britain.
It isn’t just foreigners: according to Douglas & Gordon’s Ed Mead, there has also been a “cliff-like fall” in sales to banking clients – once the “vital driver for cash-fuelled high-end housing.”
The result? “Homes in certain parts of London… such as Chelsea and Notting Hill” are taking months rather than days to sell. Will that change any time soon? It could do. But as we have said here before, demand creates its own supply (and so stabilises or brings down prices). And one thing we now have plenty of is smart flats in London (see Izabella Kaminska on the matter here).
P.S A few months ago I told you here that if you were planning to sell up in London and buy elsewhere you might want to get on with it. I hope you did. According to Savills the “value gap” between prime regional markets and London is already beginning to close.