– Lawrence Williams’ quarterly take on what’s happening with Barbican Apartment Sales and Lettings –
Steady as she goes
We do seem to have been seeing something of a return to normality in apartment sales and lettings even though the various government-inspired incentives (to keep the housing market from collapsing) have largely fallen away. Maybe prices fell a little immediately following the ending of the stamp duty concessions as those buyers who may have missed the boat sought to claw back the difference.
Latest information, however, suggests London apartment prices are on the up again after a slow start post-lockdown. There also may even have been a surge in foreign buyers which may further increase the speed of any property price recovery or even lead to additional gains.
One shouldn’t be too complacent, though. Inflation is rearing its head again and there is the growing possibility that the Bank of England (BoE) may start to raise interest rates to try and cool things down, although it is holding off for the time being. Any interest rate rises would very much need to be a balancing act for fear of derailing the post-Covid growth in the economy, such as it is. A higher bank base rate, though, would undoubtedly lead to higher mortgage payment demands and fear of this could well adversely impact property prices, but not yet.
We thus suspect that any bank base rate rise will be put off as long as possible and that if and when it does happen the rate increase will be tiny initially – perhaps 25 basis points – in order to try and judge any adverse market impact. The BoE will likely take its lead on this from the U.S. Federal Reserve (the Fed) which is in the throes of trying to manage a much larger economy, but with an equally worrying, and perhaps greater, rise in consumer price inflation to contend with. The latest US Consumer Price Index rate in America has been reckoned at 6.2% over the past year. So far the Fed has stuck to its guns suggesting that the rising inflation is but ‘transitory’ as Covid works its way out of the system, but the most recent indicators are that inflation is likely to be more severe, and last longer, than initially suggested. But, like the BoE, the Fed is intimating so far that any interest rate rises may be further into the future than markets may have been anticipating. However the most recent data release suggests that it may have to move faster than it has been intimating so far.
What might be taken as encouraging for the property market is that the Fed’s initial response had been in cutting back other forms of economic stimulus, but leaving interest rates alone until later next year. Some have even suggested it may not impose rate rises until 2023 or even 2024 for fear of creating an equity market crash, but the worrying inflation rise looks as though it may force the Fed’s hand rather earlier.
It was expected that the BoE would not raise interest rates before the Fed did as that would strengthen the pound sterling on the currency markets, but even so there are strong calls for it to do so sooner rather than later with inflation seemingly moving worryingly high in the UK also. While a rate increase might benefit tourists going overseas, that is unlikely to be a government priority. Protecting the UK’s export markets for goods and services, though, could likely be a focus of government policy and these would become less competitive with a stronger pound which could lead to a delay in biting the interest rate bullet.
Talking to some of the estate agents who specialise in Barbican properties, things do seem to be moving ahead relatively strongly pricewise on both the sales and lettings fronts. As one local agent puts it: ‘Our viewings have risen drastically especially for type 20’s and 21’s. Studios are also popular as City workers are getting back to commuting. Prices have risen more to the values before Covid. Lettings are also back to the rental values before Covid – and perhaps moving above them’.
Another of our local agents confirms that for potential sales footfalls are high, but perhaps sale completions are not as rapid as the high levels of viewings might suggest so far. However, the lettings market is described as ‘frantic’ which bodes well overall suggesting that the return of workers to city offices may be running higher, and faster, than some had been suggesting.
Another agency, which is trying to break into the Barbican market, notes that in general, it is experiencing positive market conditions for both sellers and landlords as there is balanced supply and favourable demand.
Recent announcements from major agency chains and financial institutions on the market for sales and lettings are also hugely positive and do not foresee any downturn before Christmas – and maybe for longer. Altogether this has been a positive quarter for Barbican apartment owners.
Meanwhile research from KSEYE has suggested that it has not been plain sailing for all prospective mortgage applicants – particularly if they are self-employed or have irregular income patterns. It found that one in three mortgage customers in the UK, from a 750 plus applicant survey, were rejected by lenders during the process of applying for loans. It found:
- 32% of all mortgage applicants faced at least one rejection from a lender
- 44% were rejected due to having an irregular income rather than a monthly pay-check (30% were self-employed)
- 33% of those who were rejected for a mortgage already owned another mortgaged property at the time.
If this applies to London properties it is something of which Barbican sellers should be aware.
LOCAL ESTATE AGENTS’ COMMENTS
Glen Cook at Hamilton Brooks: Sales continue to be agreed at a slower pace than June, but it’s now a steady, sustainable market and going forward I don’t think we will see the wild price fluctuations we have seen before, prices are holding steady. My concern was a ‘meaningful’ return of workers to their City desks, which is slower than I had hoped for. We are seeing higher footfall, but it seems the younger City workers are providing that footfall, which is not unexpected. On the supply side, we are now seeing a shortage of most types of Barbican apartments which is normal for the Barbican and wider City of London Market. My opinion is sell when no one else is. Less competition means a better bargaining position.
Nick Scott at Scott City: The City market still faces some challenges although the signs are there that confidence is returning, the pandemic is almost over (we hope), vaccination rates are up and workers are returning to the office.
We have seen an increase in enquiries, an increase in viewings and an increase in offers for City properties especially the Barbican. The rental market has seen a complete about turn in the last two months with sales hopefully following. It’s noticeable that there is increased activity in the Barbican although we are still low on stock. We wish all the Barbican residents a Happy Christmas and the hope that 2022 will be better for all of us.
Nicola Lee at Nicola Lee Ltd: We are happy to report a renewed vibrancy in and around the Barbican. Activity on our website is strong and viewings have increased to a normal level. Prices are stable and we currently have several properties under offer. All types of properties are being considered as working from home is not as important a consideration for buyers as it was. We look forward to a continued vibrant market in 2022.
Tina Evans at Frank Harris: The sales market in the Barbican continues to be buoyant with flats selling even before we have added them to the websites, and a shortage of stock in all price ranges. We predict a busy last quarter of the year and with the opening of Crossrail next year there will be more demand than ever to live within the square mile.
We wish all the Barbican residents a peaceful and Happy Christmas. www.frankharris.co.uk
Glen Cook at Hamilton Brooks: If you had asked me during all of 2020 and the first half of 2021 if the lettings market would be as frantic as it is now I would never have believed it. We advertised an F1A studio a few days ago and have 20 viewings booked in! There are just no apartments to let, if you have a flat that was let during lockdown now is a good time to seek advice if it’s underlet.
Eli Logavatu at Scott City: The rental market in the Barbican and surrounding areas is very good at this time and we have a long list of clients actively looking for Barbican properties. The months of August and September saw record breaking numbers of properties let. This was due to the return to offices in the City. At present our rental stock levels in the Barbican are low. We require new instructions for many waiting clients. Rental values are considerably up.
Lindsay Lee at Nicola Lee Ltd: The lettings market in the last few months has been buoyant. Once September arrived all our properties let quickly. Any property well presented let immediately at the full rental price. The demand has been so great we could have rented our properties over again. Rental prices are back to the level they were at before 2020.