In the last issue of Barbican Life we commented that the Barbican sales and lettings market was getting back to normal given all the uncertainty ahead of the June general election, the start of Brexit negotiations in July and the implementation of a new stamp duty range which has had the effect of making many Barbican sales more costly, given the high valuations of Barbican properties. Also, as you will see in our Personal Finance column, being able to offset mortgage interest payments against buy-to-let income is gradually to be withdrawn which will affect this sector of the market.
We thus felt, subsequently, that our analysis may have been a little premature, particularly with commentators on the market seeing a weakness developing in London prices, but, as you will see from the agents’ comments below, the view we took in the last issue was for the most part correct – at least for one bed flats and studios. Prices may be flat and perhaps some of the froth has been taken off the top end of the market, but by most accounts Barbican properties are still selling relatively well, although perhaps a little slower to complete – the rental sector also seems to have held up quite strongly.
Estate agent Hurford Salvi Carr, which specialises in city centre and docklands properties perhaps takes a slightly more sanguine view in its latest Residential property review issued in July.
H-S-C comments that there was some downward movement in asking prices in the City in the early months of 2017 but, overall, the price correction in markets in its sales areas, was modest. However, the surprise result in the General Election upset the status quo, prolonging the uncertainty surrounding Brexit and injecting renewed anxiety about the future. Higher levels of Stamp Duty Land Tax (SDLT) for more expensive properties was already a disincentive to buying, with prices for 2 bed flats typically close to or above £1million. In these conditions, the agency notes, few people are willing to speculate on the prospects for price growth and the market stagnates. This has the potential to prompt further price pressures because of the impact on confidence – particularly amongst those looking from outside the UK – and that affects activity levels and confidence throughout the market, although the fall in the value of sterling against some other currencies will have, to an extent, compensated for some overseas buyers. Lenders are also more cautious in these conditions.
According to the agency, though, prices for one bed flats, have not moved much in either direction but those for two bed apartments have been slipping. What started as a reaction to SDLT has developed into a general inertia fuelled by negative press coverage of the London residential market. Properties priced at under £1million have been fairly immune but higher priced homes have lost value says H-S-C. Those in the price bracket £1-2million are reckoned to have dropped 10% in 2016 and those over £2million by 20%. These numbers are largely explained by Stamp Duty – properties attracting the highest rate of duty experienced the largest price falls.
LOCAL ESTATE AGENTS’ COMMENTS
The following are comments from some of the Estate Agents which specialise in the Barbican market and are familiar with current valuations. Most will have lists of prospective purchasers or renters. Yes they will charge commissions – but these tend to be very competitive in the current market. You should not necessarily be swayed by the plethora of TV advertisements for online agencies offering flat fee sales charges. These will not have any specific experience in the Barbican apartment marketplace. All those agents whose comments are noted below are advertisers in Barbican Life and some idea of prices and current properties on offer may be seen in their advertisements.
Nick Scott @ Scott City: The uncertainty of the last six months has improved with us seeing more enquires especially for Barbican properties. These enquires are mainly from owner occupiers looking to buy a home rather than an investment. Rental investments are driven by yield and capital increase which at present means there is a lack of buy to rent purchases. Asking prices have dropped a little over the last few months but this has encouraged activity, owners are having to be realistic with their pricing. For Barbican flats available please visit our web site:- www.scottcity.co.uk
Glen Cook @ Hamilton Brooks: We have had an interesting and unexpected second quarter, at the end of April the market activity picked up , to the point where we have the most flats under offer we have had ever had. Prices are not increasing but are stable we are not getting best bids or gazumping just a normal market with normal activity, more instructions and more selling. As we enter the summer market activity will naturally decrease and historically pick up in September. Personally I believe the pick-up in activity is because buyers have now accepted the change in stamp duty payments and just got bored of waiting for what may or may not happen with Brexit…… www.hamiltonbrooks.co.uk
Tina Evans @ Frank Harris: We are seeing a few sales go through of flats and larger properties which have been listed for quite some time, compared to the last few years volumes are lower as are achieved prices. The conveyancing on some of our sales has taken many months as our vendors did not have the relevant approvals for alterations to their properties. If you are considering selling I would strongly suggest that sellers check their paperwork before they list their property for sale.
Generally there are buyers out there looking but I think it’s the same story as earlier in the year, they are cautious, they need persuading that they are not overpaying, with our experience on the estate I do think we are able to give them that confidence. If you would like an accurate up to date appraisal of your property please do not hesitate to call me. www.frankharris.co.uk
Tom O’Halloran @ Thomas Michael: a more balanced market continues as some buyers are continuing to adopt a wait and see approach, mindful of there being downward pressure on Central London property prices and being cautious of overpaying. That said, there are still lots of buyers out there and sales will be agreed if well-presented flats are brought to the market at a sensible price level. The fundamentals of the desirability of the Barbican as a place to live, which has led to the soaring prices in recent years, remain the same. If you would like a market appraisal of your property please get in touch. www.thomasmichael.co.uk
Glen Cook: The Letting market remains good, with reasonable demand with a limited supply, but we still struggle to let flats that are cluttered /old carpets, tired décor. If you think of say a smart hotel room or show house that’s what a rental flat needs to look like to attract the right tenant.
Joe Davison @ Scott City: With everything that has occurred so far this year, most clients were a little unsure as to what the rental market would do. Surprisingly, rentals at Scott City have been very busy, and so far showing no signs of slowing up. Having had a very good couple of months, the main priority is gaining some more Barbican rental stock, as there is a long list of potential tenants searching at this minute. If you are considering renting your flat, please do not hesitate to contact us for a free valuation.
Tom O’Halloran: We have had a busy lettings period since early June and we hope this will continue through now to late September. Lots of flats, which in previous years have sat on the market for a while, have been let on the first or second viewing. As usual, we have a number of applicants looking specifically for Barbican flats. If you would like a rental appraisal or just to discuss the lettings process I would be pleased to hear from you.