MARKET COMMENT JUNE

THE FLAT SEASON

A week or so back we had the Epsom Derby, generally seen as the pinnacle of the flat racing season. The week before we had Chelsea Flower Show. These come right in the middle of ‘the season’ which kicks off with the Cheltenham Festival (horse racing over jumps) in March and ends with the Goodwood revival in September (car racing in vintage clothes) with Henley, Ascot, Wimbledon, Lords etc in between.

The property market traditionally has its own season, the spring market. The 2023 spring market however feels very much like a ‘flat’ season with a different emphasis on the word flat. In fact, to continue the racing analogy, the property market came out of the starting stalls at the beginning of the year at a gallop, only to hit soft going by early April. Read more

There are perhaps many and varied reasons for the changing fortunes over the first half of this year. Despite all that the world faced, and there was much to be despondent about, the prime London property market seemed in rude health as the post Covid world took off. However, this new optimism appeared to stumble as it faced various hurdles in the 2nd quarter. It started with the month of Ramadan, between 22nd March to 20th April, which overlapped with the Easter weekend on the 7th to 10th April which was then followed by the back-to-back holidays in the UK for May day (1st May) and the coronation (8th May). Perhaps less influential, but talked about nonetheless, was the extremely late skiing season! Meanwhile the reality of rising interest rates took hold, it was only back in November that the base rate was at 3% (1.25% in June 2022) but by May 2023 it was 4.5%. Meanwhile a tired party in Government facing up to a listless opposition is like watching two geldings fight for the attentions of a brood mare….what’s the point if either wins! (here ends the horse analogies).

The following provides some support data to this overview, courtesy of our ‘go to’ source, LonRes;

Agreed sales for the month of April were at a record low, excluding the lockdown-affected April 2020, and down almost 35% annually
However, sales taken over the course of the year to date are only 1.4% below the pre-pandemic average between 2017 and 2019
Across all prime London areas, the average discount to asking price rose to 9.1%, the highest in more than three and a half years.
Additionally, the number of properties under offer, a lead indicator, was 11.7% lower than a year earlier, suggesting that activity is unlikely to increase significantly over the coming months
In some positive data, new instructions in April were up by 8.8% on April last year, taking the year to date rise to 9.2%.
Average values across prime London also showed a slight fall in April, with an annual decline of 0.9%.
Prime inner London was the best performing area, recording annual growth for the first time in six months where it was up 3.5%.
The market is looking better at the top-end though, with £5m+ sales volumes in April up 26.1% annually and 58.2% above the April pre-pandemic average.
The number of properties going under offer in April also grew, 13.6% up on a year earlier.

We have alluded to the strength of the super-prime market in earlier bulletins, and this continues to perform as a ‘pull’ on the market. The contrast with the broader domestic market, where the ‘push’ factor is so critical, could not be more apparent. While both are sentiment influenced, the latter is nearly entirely dependent upon affordable and available mortgages, and the former more reactive to exchange rates and taxation.

WHERE HAVE THE OVERSEAS BUYERS ORIGINATED FROM?

An interesting article was published recently by one estate agent who, through a freedom of information request to Land Registry, established the following league table of current non UK owned residential property;

Hong Kong	13.2%
Singapore	8.4%
US	6.4%
UAE	5.7%
Ireland	5.3%
Malaysia	5.2%
China	4.6%
Australia	4.4%
Kuwait	4.3%
France	3.7%

CHANGE IN THE AIR

Politics continues to mess up our lives. We have the bizarre situation of a Conservative Government introducing the highest tax rates in 70 years. Meanwhile a Labour government in waiting is championing the middle class home owner with the slogan ‘builders not blockers’ as they stand fair square behind capitalist property developers (the stand out beneficiaries of QE and the largess of the Government’s Help-to-buy scheme) to address our ludicrous ‘nimby’ planning rules. Meanwhile this month the conservative party have a new bill before parliament which gives yet further rights to tenants, and makes it more difficult for landlords to take their properties back. Read more

OUR NEWS

We keep very busy and are thankful that London continues to hold its place as The Global City.Our acquisitions side has been humming and, it has to be said, a welcome change to the past 2-3 years. The rental market remains on fire, and our challenge is to know how far we can push the rents to optimise our clients income. The Obespoke business goes from strength to strength and the following are two lovely projects to showcase;

NOTTING HILL, W11

6 bedroom duplex

CHELSEA, SW3

4 bedroom townhouse

Further information

For more details about No. 1 St James’s Street and other projects, contact Hugh, Patti or Jonny on

+44 (0)20 7349 8920 or email info@obbard.co.uk

NOTE: The opinions expressed are solely those of the author and are not intended to offer any advice, formal or otherwise, on the nature of property investment. All the information is provided in good faith for general interest only. Recipients who have not formally appointed Obbard are advised to seek independent professional advice and to satisfy themselves on the state of the market, the opportunities and risks.

MARKET COMMENT JUNE

THE FLAT SEASON

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