Simone Signoret, the great French actress once said “Nostalgia is just not what it used to be” and it’s all too easy to get into the mindset that things today are not as good as they once were. When I sit down to write our market comments, I try very hard to focus on property – and property alone – as that is what clients come to us for advice about. Politics, the stock market and what the future might hold is either the province of astrologers or people much brighter than I. After all, many of our clients create the funds necessary to commission our services in the first place through just such “apercus”, and don’t need yet another opinion.
Occasionally, however, there comes such an event that cannot be excluded from our market comment as its effect upon the world of London property is so direct. I think that the election held on the 13th December 2019 was just such an event. The morning after the election, we were surprised to find ourselves busy being rung by new clients wanting to get on and buy and existing clients whose searches had been on hold who now wanted to get off the fence.
In some ways, I’d love to think that it was only us who were busy, but the general feedback from everyone I talk to is the same, so we aren’t alone in having felt the tide turn strongly.
This activity has continued into the New Year and many of the selling agents are now starting to complain that they are short of stock and struggling to get new houses onto the market, as owners begin to suspect that prices might improve.
2019 had been a boring year with the market generally handicapped by political instability as a result of
– the possibility of an election with an uncertain outcome
– high rates of stamp duty land tax (SDLT)
– the political log-jam over Brexit
Had I been a betting man asked to rank the three horsemen of the property apocalypse in order of their market toxicity, I would certainly have listed those threats the opposite way around; yet after the election, we discover that the uncertainty over the outcome of a snap election was the pachyderm in the parlour, and to some extent, the other issues were things that people felt they could live with, or arrange their lives around.
Before anyone thinks that I’m forecasting 2020 to be a year without clouds or shadows upon the horizon, I’m not; the London property market is still a fragmented place, where some parts are busy, other parts are not. At the risk of sounding like a stuck record, I’m still of the opinion that the market divides into two very distinct parts.
The first part of the market is the domestic marketplace which is for indigenous Londoners, from Britain or elsewhere, simply trying to house themselves and their families – whether it be in a £500,000 flat in Twickenham or a £10 million house in Kensington. For these people, life goes on and needing somewhere to live is non-negotiable, the only question is whether you buy somewhere for yourself and pay your own mortgage or rent somewhere and pay someone else’s.
The second part of the market is the world of discretionary purchases, whether they be investment properties for south-east Asian buyers, penthouses for potentates, or London Dachas for Russians, and this market is still very uncertain for a variety of reasons that are often not connected to London. It is on this subject that I would still sound a note of caution, as a property whose price (and likely market) is more dependent upon the price of oil futures or the prevailing politics in Russia, can be said to have decoupled from the mainstream of the London property market. That kind of investment, I would venture to suggest, is not a good or predictable vehicle for money.
The likely scenario for this year seems to suggest that the market will grow in confidence as more buyers decide to hop off the fence, but sadly I don’t expect the uptick in demand to be matched by an increase in supply. Instead, I expect vendors to get more ambitious over their pricing and I expect any number of potential sellers to look once again at the boring level of SDLT on their new home and decide yet again to postpone selling until they absolutely have to. 2020 is looking like a year for determined purchasers, as there will be competition for houses and anyone of a nervous disposition or shy about putting their best foot forward is likely to finish the year empty-handed. For anyone hoping to buy a great house, trying to do it this year without representation will be very difficult.
Now we’ve officially quit the European Union, it seems a reasonable time to reflect on what might be said to be the British version of Simone Signoret’s marvellous French aphorism, “Fings ain’t what they used to be”; I prefer the French version myself, but that’s just me.
Saul Empson
Haringtons UK Ltd
London Market Comment
Spring 2020