Sales and rentals holding up despite Covid
We keep on getting mixed messages from the media as to how property prices are holding up in the new lockdown, and in central London in particular with the ever increasing trend toward working from home. This has almost certainly led to a so far small exodus of central London property-owners, probably more evident among flat-dwellers – to buy properties further afield, and with perhaps a little land, particularly if they no longer have to commute five days a week to a central office.
In theory such an exodus would seem likely to adversely affect Barbican property prices, but our little oasis within the urban sprawl, with its gardens, lakes and cultural facilities on our collective doorsteps may well be proving to be something of an anomaly in this respect. Comments from our local estate agents suggest that prices here are holding up better than we might have expected – at least so far. Sales volumes also seem to be remarkably strong given the lockdown will have restricted estate agent office footfall.
Even so, we suspect that the end to the Chancellor’s stamp duty concessions next month may well have an initially adverse effect on Barbican apartment sales, and the prices thereof. Once this falls out of the equation, prices should stabilise, or even resume an upwards path. This has now been extended to June which may prolong any market surge.
The trend towards home-working and a subsequent tendency for homeowners to move to the leafier suburbs, or further afield, is perhaps more likely to impact the lettings market, with property sales prices recovering more quickly. Even so, reports from the local agents suggest that there is still good rental demand, although rental rates may have slipped a little. Barbican property values have proved resilient to temporary downturns in the past and we suspect any current downturn, if indeed there is one, will be similarly shortlived.
The latest Rightmove property sales index report and Halifax Building Society findings do seem to show that property prices in London, rather than falling, are at least holding their own and may even be slightly higher year-on-year. Rightmove in particular notes that after three consecutive monthly falls the average price of property coming to market surprisingly increased by 0.5% in the latest month, as upwards price pressure seems to have begun to resume. The online agency collective also saw the number of new buyers continuing to grow despite it now being too late for most buyers to beat the stamp duty concession deadline. Latest figures have seen Rightmove visits up 45%, with keen home-hunters sending in 18% more enquiries, and the number of purchases agreed is up by 7%. High demand looks to be outstripping supply and pushing up prices with new seller numbers 21% down on the prior year as owners of family homes delay coming to market, perhaps due to home-schooling distractions.
It should be noted that the Rightmove figures quoted above are for the nation as a whole and, for a change London figures may be lagging. Central London may even be underperforming the rest of the conurbation, but the overall trend has to be promising given the coronavirus-related doom and gloom housing market prognostications that had been forthcoming from some observers previously.
The better than anticipated national property value growth figures have been confirmed too by the UK Government’s House Price Index for 2020 which has recorded national property price value growth of over 8% over the full year. However there are some big regional differences with London price rises the lowest of all at 3.5%. But at least this is still a positive trend, albeit lower than across the country as a whole.
There is another fly in the ointment though in the Rightmove findings, which is perhaps stamp duty-related. One in five buyers who agreed a purchase in July last year have still not completed more than six months later, with an estimated 100,000 buyers in total still likely to miss out on their expected tax saving. Much of this will be due to bottlenecks in the conveyancing process due to the surge in demand from homebuyers looking to take advantage of the Chancellor’s original stamp duty concession which ends on March 31st. Although whether failure to meet the deadline will lead to a sale being cancelled, or renegotiated, is much less certain.
So overall potential Barbican property sellers should not be too despondent. Prices look to be holding up far better than might have been expected, and may even accelerate if and when we come out of lockdown. There still appears to be a good lettings market too, even if prospective rental income may have dropped a little. From the agents’ comments below the past quarter has been difficult for them, but all seem to be confident of better things ahead.
ESTATE AGENTS’ COMMENTS
Marco Fugaccia at Hurford Salvi Carr: We have started the New Year with a third lockdown and the London residential sales market in general continues to remain fragile, whilst renters are playing a game of musical chairs looking for the best rental deals possible, however there has been an increase in volume transactions. The attraction of the Barbican has helped its properties values (both sales and lettings) to remain resilient and with Spring just around the corner we hope to see more buyers and tenants returning to the market.
Nicola Lee at Nicola Lee Ltd: We are still in lockdown at the time of writing this commentary. The New Year brought new buyers who were keen to take advantage of the stamp duty holiday which ends 31st March. Some solicitors by mid January were not accepting any new instructions looking to complete by the deadline. We are all looking forward to spring when historically it is a good time for sellers and buyers alike. We continue to monitor activity on our website which remains positive.
Nick Scott at Scott City: I hope when this is being read the government has started to ease lockdown and spring is with us. January and February have been tough months for everyone with the increase in COVID-19 cases and the cold weather. This has been reflected In the level of interest in buying property, not just in the Barbican but central London as a whole. With a slow return to work over the next few months I can see there being more activity especially with the vaccine being administered successfully and an improvement in the weather. Many of our prospective buyers are waiting to see a change for the better, once this happens confidence will return and the market will recover and move forward. www.scottcity.co.uk
Tina Evans at Frank Harris: Well, January was our busiest month in terms of sales agreed for a few months now, and this was not entirely related to the Stamp Duty holiday but of course it helped. We have sold more tower flats in the last two months than in the whole of 2020, and with mortgage approvals at a 13-year high there is definitely growing activity. Prime Central London has of course suffered due to businesses being closed along with retail and hospitality but with prices a little softer in the City we are seeing buyers who had not previously considered the area discovering its rich heritage for the first time. There is always demand for the Barbican, but buyers who are new to the estate need a guiding hand to assist them with the complexities of lease extensions, how the service charges work and inspiration on how to renovate their new home. If you are considering selling your property please have ready your documentation regarding alterations to your property (Landlord’s Consent, Listed Building’s Consent, Garchey Removal Consent) and “dress” your property for photographs and viewings – online presence is vital with today’s tech-savvy buyers. – www.frankharris.co.uk
Glen Cook at Hamilton Brooks: What a tough quarter to put into words, firstly we are open which is surprising and welcome. The City from a commuter perspective is as empty now as it was in the first lockdown, no surprise I guess. The surprising change in the last 3 weeks is that activity has picked up, I can only assume the huge vaccination programme is giving back confidence. My view is that in the next few weeks as the vaccination confidence factor picks up and the cold weather is hopefully behind us that the recovery will pick up pace. www.hamiltonbrooks.co.uk
Lindsay Lee at Nicola Lee Ltd: Last spring during the first lockdown was a difficult letting period. During the current lockdown, if priced correctly, flats are still being let so we are optimistic that spring will bring new tenants. Presentation is still key
Nick Scott: Demand for Barbican rental property is still surprisingly good although rental values are down by approximately 10 to 12%. Good quality enquiries have been coming in from clients wanting to be close to work who don’t want to use public transport. Although not back at work they are planning for the future when offices will be encouraging their workforces back.
Thanks to Lawrence Williams’ quarterly view on the state of the Barbican property market