Buying and selling property
A property landed in my inbox this week and I immediately knew it was something I had to see straightaway. You could just tell from the floor plan and photographs that this was something special and I was not disappointed when I arrived to have a look around. In fact, this property was so exceptional I didn’t want to leave. Thoughts turned immediately to a client who had been waiting patiently for just such an opportunity and I was straight on the phone to give them the good news.
This got me thinking about the last time I was so excited about a new listing. It had been quite some time. Opportunities such as this one have been in such short supply during the last 2 years of covid restrictions. It reminded me why I love my work so much despite these challenging times. You cannot beat the feeling when your heart begins to race in the presence of an exceptional property.
Around 90% of my work involves visiting unsuitable properties which are in some way flawed: the house on the wrong side of the street, the apartment with the obstructed view, the property where too much has been spent in the wrong areas by enthusiastic but amateur interior designers. Quite simply, there’s a lot of dross out there.
So much so, that there have been times during the past 2 years when I had honestly begun to question my own judgement. Am I getting too fussy in my old age? Do I need to relax my property search criteria in order to assist more clients to buy more property? Am I spending too much time looking for perfection? Thankfully after today’s visit, I was reminded that those exceptional properties do still exist. They are still out there, they just don’t come to the market as often as the regular run of the mill properties do, especially during difficult times.
So why are exceptional properties so hard to find?
As a rule, I spend a certain amount of time each week keeping an eye on what comes up for sale in the area where I live. My wife and I have often discussed a move to a larger property locally in recent years but that elusive upgrade just doesn’t seem to come up for sale. If I cannot see my next move on the property search portals or by researching what might be available to buy off-market in my part of London then I am unlikely to list my present house for sale. I don’t have to move after all.
The idea of a larger property would be a purely discretionary purchase. It would be nice to have more space/a larger garden/more room to work from home but do I really need it? The answer is probably no! But would I move if something exceptional came up for sale?…probably. But it’s chicken and egg as to how I make this move happen. List my house for sale first and hope that I can find the upgraded house whilst ours is under offer? It’s a big risk. Or, see the perfect house come up for sale locally and then list ours for sale hoping to find a buyer before someone else snaps up my reason for selling?
Who makes the first move?
And at the moment, the property market is in limbo while buyers and sellers seek an answer to this dilemma. Property market taxation does not help to improve the numbers of sellers and buyers in the market. Increases in stamp duty rates have to a certain extent taken all the liquidity out of the market. People are just not buying and selling as often as they used to. The fact that the market has been relatively flat in recent years also does not help.
Let’s face it, if you bought a new home over £1m over the past 3/4 years, the property market would have to rise in the order of 15% just for you to get your money back and break even on your purchase, let alone make a profit. So if you’ve bought the wrong property and perhaps paid a little over the odds for it plus your 10-15% stamp duty on top, you really are stuck unless the market bales you out. And in the last decade, we just have not seen double-digit growth in the property market in any one year.
So those of you who found something exceptional to buy in the last 10/15 years, the chances are you are holding on to it unless there’s a compelling need to move. Hence we have seen a dramatic rise in the numbers of basement digs in central London in recent years and loft conversions if you still have that space available. Those with larger plots have added garden rooms and kitchen extensions. In a flat market such as we have had in recent years, the thought of moving higher up the market, paying even more stamp duty and being stuck in negative equity territory has made the majority of owners reticent to list their properties for sale and progress a move upmarket.
And so we have the perfect storm.
A scenario where significant numbers of property owners are stuck in houses they paid too much for trying to make their money back by perhaps listing their houses OFF MARKET. It’s become an expensive place to do business despite what you might think. Buying agencies bragging that they find properties “off market” are probably not telling you the whole story.
That in most cases the owners trying to sell off-market are simply asking for too much money. With the property market stuck in a price-sensitive phase such as it is, most savvy Estate Agencies will simply choose not to list houses they feel that they cannot sell for inflated asking prices. Some of course have no such qualms but their listings stick around the market like a bad smell. The reality of the GREY MARKET is more often than not it is not the place to be buying your expensive house.
Nobody wants their house being openly advertised for a prolonged period of time with no successful sale at the end of it. After all, houses that sit on the open market at the wrong price attract a certain stigma. It creates an extended and ultimately unsuccessful online footprint that simply cannot be erased these days and can prejudice the chances of a sale in the future.
If this all sounds like a negative portrayal of the market, I should caveat the story into which sections of the market I am referring to:
The suburban market in London is very busy right now. Not enough houses for sale and plenty of buyers itching to get on with their lives. Take Ealing for example in suburban West London. Good houses are coming on in dribs and drabs. Estate Agents are organising open house viewings to get everyone in as quickly as possible. Interested buyers are then put into competition with each other and the highest bidder wins. It’s quite the bun fight.
The commuter market in the Home Counties is also still busy with buyers moving out of London seeking more space and a change of lifestyle.
Having said this, there is anecdotal evidence to say there has been a backlash to country living ideals as workers are called back into offices in London and the realities of the long-distance commute hit home.
The international buyer market in prime central London remains quiet and this is the area where the market is being hyped beyond belief. International chains of Estate Agents (Savills, Knight Frank etc ) are desperate for international buyers to come and spend their millions.
There are a vast number of expensive new residential schemes dotted around the Capital designed to appeal to the international investor and priced accordingly. Take Bayswater for example where two schemes in particular (Whiteleys/Park Modern) have been priced at more than double the rate of what you might call usual sales rates of more typically found Bayswater property.
Sure there are basement gyms and swimming pools, underground parking and 24-hour concierge services but are these prices sustainable once the newness of the scheme has worn off? I’m not so sure. Occupancy rates at London’s top Hotels are currently running at c.15% which is indicative that we are not yet back to the point where international travel is open to its fullest extent.
The “normal” central London prime market is also ticking along. Prices are being held up in the main by a supply/demand imbalance. A good house is listed, several buyers chase it and a sale is agreed upon quickly. Tired, overpriced houses sit around the market gathering dust. Volumes of transactions are still painfully low and certainly far too low to sustain the volumes of Estate Agencies presently in the market. In fact, some of the larger estate agencies have been making quite significant redundancies to reflect these lower volumes of property selling.
This contrasts quite dramatically with what you are probably reading in the press right now.
You would think from what is being reported that the property market is flying along with no issues whatsoever but this is just not the case if you read between the lines.
There might be more transactions happening now than during the worst periods of lockdowns etc but you can make any statistic portray a positive spin coming from such a low base. Compare sensationalist property market headlines with what you are reading about interest rate rises, economic headwinds, falling share values and bitcoin collapses and you begin to take over-optimistic property market predictions with a pinch of salt.
I feel like I have sounded like a broken record with blog posts these past 2 years calling for patience and prudence. The property market is going through a prolonged period of severe imbalance. Strong prices are being achieved for “best of a bad bunch” properties. Ill-advised buyers are going to find themselves paying too high a price for the wrong property and they will not be baled out by fast-rising prices.
Thankfully, the property I visited today reminded me of why I love this property buying business.
The excitement of reporting back to your client that today you saw something truly exceptional has been a rare conversation these past 2 years. The market is truly frustrating but it is definitely worth waiting for those exceptional properties to come along.
Sure you may find yourself in competition to secure a best of breed house but premium property always achieves a premium price despite market conditions. Buying exceptional property should not be about making huge compromises.