London property price rises beginning to fade?
By all accounts, the summer has seen something of a cooling off in London’s house prices and the Barbican is unlikely to be an exception so perhaps the dream for Barbican owners of a plus £1 million one-bed flat may be fading for the time being. But this has not yet turned into real price falls or collapses according to the Royal Institute of Chartered Surveyors (RICS), or to our local estate agents, and the Barbican tends to be more insulated than many areas from downwards price fluctuations anyway because there is a relatively limited stock and flats within the complex are always in demand because of some of the unique aspects and qualities of living on the Estate. Nonetheless the froth may have gone out of the market for the time being, although the summer holiday season tends to see a slowdown anyway.
The latest RICS figures do also suggest a slowdown although other sources of price statistics show wide variations, but it does seem that London prices, which had been the fastest rising may also perhaps beginning to fall back fastest too – which is hardly surprising. Rapidly rising prices tend to see asking prices climbing and what happens in a slowdown is that these higher asking prices revert to more realistic levels.
The RICS notes that property sales and new buyer enquiries in London fell back more sharply than elsewhere in July but even so a net balance of 10% of survey respondents in London still reported prices were rising – but this was down from 30% in June.
But showing how statistics vary, figures from Rightmove have been showing a decline for the past three months – something that does not appear to have been seen by the Barbican area agents. Given the Barbican is fairly insulated and such trends don’t tend to hit us until perhaps later in the day, the latest Rightmove figures, which suggest a 5.9% downturn in the past month across London, are a little sobering for potential sellers, although some areas will always fall (or rise) at different rates than others dependent on popularity and demand. These Rightmove figures do thus suggest perhaps the start of a deflating bubble rather than a bursting one, and a falling price scenario which may not apply right across the capital city, and especially perhaps not to a micromarket like the Barbican. We will have to wait and see. Perhaps the next issue of Barbican Life will be able to throw a little more light on the subject once figures for the final quarter of the year start becoming available.
Rightmove director Miles Shipside is reported by Reuters as saying, with respect to the latest figures, “There are signs the market is effecting its own natural slowdown without (an interest) rate rise, though underpinned by greater awareness among the public that the five-year holiday of record low interest rates is coming to an end …. A drop in August is typical but it’s steeper than expected this year.”
Talking to those estate agents specialising in Barbican properties though they mostly comment that things have slowed down in late July and August, but also say this is normal over the holiday season. And, being naturally optimistic, they all anticipate sales demand picking up in September again – although prices themselves may remain fairly flat. There is almost always more demand than stock available and better properties on the Estate are still moving fairly fast although perhaps fewer are going to sealed bids.
Estate Agents’ Comments
Kevin Green of Frank Harris: Since the introduction of the Mortgage Market Review earlier this year and the increasing likelihood of rising interest rates in the not too distant future, there has been a noticeable change in the London market and buyers are a lot more cautious. However, interest in Barbican property is still as strong as ever with several recent Frank Harris sales achieving record prices, including a large three bed corner flat at £1.8m and a Tower flat in excess of £1.85m. We are registering serious new applicants every week, proving there are many new buyers out there who love the Barbican as much as we do. www.frankharris.co.uk
Glen Cook at Hamilton Brooks: Everyone has seen a front page story in the last few months about housing bubbles/price drops/top of the market etc. Does any of this apply to our market, well the simple answer is yes, we have peaked, prices have reached a plateau, but that’s as far as it goes, we have not seen a reduction is demand at all, we have not seen a great increase in supply, and unless both of those issues change we shall remain as we are with a strong demand and low supply.
My view of the next 12 months is that as and when interest rates do increase we might see the supply increase coupled with a small fall in demand, if this happens, which I think it will, we could see between 10% and 12% come off current values, but it does all hinge on what happens to supply, personally If I was thinking of selling I would be doing it now rather than later. – www.hamiltonbrooks.co.uk
Matt Gibberd at The Modern House: It’s easy to sell a Barbican flat. We agents all have buyers on our books who specifically want to live on the estate, who know exactly which flat type they want and can be ushered in at short notice. We all advertise on Rightmove and Zoopla. What’s not so easy, however, is to sell a Barbican flat for the best price it can possibly achieve. The only way to do this is to expose it above and beyond the local market, to reach lifestyle-driven buyers – many of whom are from overseas – who don’t know the estate so well. That’s where we come in. www.themodernhouse.net
Nick Scott of Scott City: After a quieter July and early August the market is busier again with an increase in enquiries. The greatest increase in sales values was the in the first quarter of this year with prices now having stayed level for two to three months. Scott City Residential are offering a studio apartment two one bedroom flats for sale at present in the Barbican continuing the trend of low stock levels. www.scottcity.co.uk
Glen Cook: Lettings have certainly picked up in the last 3 months, rents have actually risen by 5% over that period due to demand and lack of good quality supply, A good number of landlords have been cashing in over the last 12 months in selling their properties to take advantage of the high sales prices prevailing, leading to a shortage shortage of good quality properties for rent.
Joe Davison at Scott City: Enquiry levels have been good, but expecting an increase due to Summer Holidays coming to an end moving into September and October. There have been decent levels of stock in the City area overall but low levels of Barbican availabilities at this current time, partly because of the high demand. Consequently we are always looking for new Barbican Properties, especially with our newly developed website – see above for link.