August Newsletter

The summer heat is coming to an end – is the property market cooling down as well? 

The end of summer is traditionally a relatively quiet period for London real estate and this year is no different. As holidays come to an end and things come back to normal in September, many are wondering what will happen to the London property market as inflation/interest rates continue to rise. This newsletter will look into what the experts are saying.  

August Market Update

This last month has been in line with the property market over the last 10 years – a drop of 1.3% percent in asking prices in the UK. August is always very quiet for the real estate market as people are on holidays around the world. According to Rightmove, “A drop in asking prices is to be expected this month, as the market returns towards normal seasonal patterns after a frenzied two years, and many would-be home movers become distracted by the summer holidays”.

A cool down or a crash?

As mortgage rates continue to increase, many are concerned about the impact that this will have on property prices. This is yet to be seen, however there have been some predictions. 

The Bank of England Chief Economist has predicted that the UK property market will cool but not crash. According to an article in the Financial Times, “experts suggest there won’t be a spike in distressed sales because the level of debt as a proportion of property values across the housing market is nowhere near where it was in the 1990s, or during the financial crisis, when the average UK house price fell 19 per cent in the 18 months from September 2007.” The head of research at Zoopla also agrees that there won’t be huge price drops as there were in 2007. This is because mortgages have changed – in 2007, over 30% of mortgages didn’t have to give their incomes to the bank. Moreover, 20% of mortgages were on loan to value mortgages that were 90%. Mortgages are much safer today – only 10% of mortgages are loan to value at 90%. 

The Treasury department gathered a consensus of market outlooks that concluded prices will be just over 7% higher than they were at the beginning of the year, with a predicted increase of 1.3% next year. There is also the possibility of prices going down 1.5% this year and 3% next year, however that is the worst-case scenario according to their consensus.

A study by Capital Economics predicted that the London market will fall by 12% in the next 2 years, however the prime London market will only drop by 2% next year and increase by 1% the year after. This is because wealthier buyers are much less affected by inflation and the increase in mortgage prices. There is still also a significant amount of pent-up demand from foreigners who were not able to buy during the pandemic – who now also want to take advantage of the weakening pound. 

My Take

Clients always ask if now a good time to buy, and with the recent headlines of mortgage rate increases, this question is being asked even more. Yes, we are potentially heading into globally uncertain conditions, however I always advise that whoever purchases a home in London must do so with a long-term mind set.

London real estate has historically been a haven for buyers from all over the world and has proven to be a sound investment. Although the prime market has been growing over the last year (3.3%), it is still 17.6% down from its peak in 2014. Moreover, the pound has lost a lot of its value since then so it could be argued that now is a great buying opportunity. Savills are predicting that the prime central London market is set for price increases of 23.9% in the next 5 years.

Navigating pockets of opportunity is key in this market – that is why working with a good buying agent will help ensure you buy right. Cash buyers should be able to get the best discounts as they will be able to offer deal certainty to sellers who are nervous about the market. 

Property of the month

Television Centre - £3,200,000 

Every newsletter will highlight a property of the month. As a property buying consultant I spend countless of hours looking at property, from time to time I come across properties that tick most (if not all) the boxes.

This is an incredibly exciting opportunity to purchase the last available unit at the iconic Television Centre in White City. This unit is certainly a case of “last but not least” as it’s been under offer twice, but the buyers were not able to complete as they were not able to sell their own homes first. In fact, this unit has been a favourite of mine from the beginning. The selling point are the three terraces that provide 130 square meters of outside space. There are three bedrooms and plenty of space for entertaining – the flat is 218 square meters. 

The Television Centre is one of the greatest London new builds. The building used to be home to the BBC recording studio and his since then transformed into a fantastic residential and commercial space. There’s a 24/7 concierge, parking and all the flats come with comfort cooling (a must these days). It’s home to Soho House – residents of the TVC get access to the Soho House gym which is arguably the best in London. There are plenty of restaurants on site – Kricket, Patty and Bun, Bluebird and more. Plus, Westfield is just across the road. 

I’ve written about why I think White City and the Television Centre is a great place to buy on my website – read more here. 

If you are interested in this flat or purchasing a property in London, please send an email to iyad@iyadgrahne.com for a free consultation.