Market Update – 6th November 2015
It seems like an age since I last penned a market update but it’s only actually been a month. In my last update I spoke about a quiet September (albeit with a more positive end) and how the overall lack of stock was supporting prices in all but the two bedroom flat market. October was a much busier month than September and, with the exception of the half term period last week, saw a return to the more traditional brisk Autumn market. This year overall has been unusual, with various unique factors such as the election affecting the normal ‘flow’ of the property market.
At the top end of the market (£2m+) movement has been fairly limited, with the main constraint being the increased stamp duty costs. These costs are unlikely to change anytime soon, and as experience has taught us in the past, will eventually be ‘sucked up’, however they certainly continue to create a drag at this end of the market.
I’ve said it before but one of the toughest markets is the house market between £1.5m and £2m. These are often the larger houses between Northcote Road and the Nightingale Triangle, or properties between the commons that have been fully extended, possibly including basement conversions. It surprises most people to hear that the vast majority of our house buyers don’t actually have children, they are more often than not young families with either no kids yet or perhaps just a young one in a pushchair. They are usually upgrading from a 1,000sqft two bedroom flat and frankly a 1,800 sqft between the commons house seems enormous and almost impossible to fill. There are therefore a relatively small number of buyers who see the benefit of a 2,000 sqft to 2,600 sqft fully extended house and those who want more space in their 1,800 sqft house can simply extend their own property, saving six figures plus in stamp duty and associated moving costs.
Mid price houses in the £1.4m – £1.5m range are thriving, and well priced stock is generally finding buyers pretty quickly. These houses are extremely popular and lack of supply is intensifying the demand. Values are not increasing however as buyers will not be drawn upwards on price, and instead will simply wait for the realistic, correctly priced properties to come to the market.
One bedroom flats are generally moving quickly however as I discussed last month, a real ‘bubble’ had formed with two bedroom flats. We see bubbles being formed occasionally, with the last one effectively causing the softening of the house market last summer. When stock of a particular type is low, one or two properties sell for unusually high prices and this spurs on owners of similar properties to come to the market. One or two more sell, and agents value ever higher to try and capitalise on the demand. More and more similar properties come to the market and after a few months the market becomes saturated with stock. The ‘bubble’ is formed. We saw this bubble forming over the summer and we had come to the point last month where there were around double the number of two bed flats on the market between the commons that we would normally expect. The good news is that these numbers have been drastically reduced, with some sellers realising that they are simply not going to achieve the sky high properties and staying put, or reducing their prices down to a level that buyers find palatable. Unfortunately this does mean that some of the more ambitiously priced properties remain on the market and are doing so for longer, skewing both the £/sqft and time on the market data.
Here is a quick snapshot of what properties are available on the market between the commons currently:
As I prepare budgets for next year we have been carrying out a huge amount of research into what is on the market and also trying to foresee the likely market for 2016. The best description of 2015 was ‘unpredictable’ with properties selling throughout the summer but quiet in the spring and early autumn. The general consensus is that 2016 will see the market revert to normality with a busy start, spring and autumn and some quieter months in between. Despite recent reports of how over valued London is at the moment, the lack of overall supply still underpins the overall prices and we don’t feel that will change in 2016. Overall we are still predicting very low single digit growth in property prices over the next couple of years.
In portal news, new research claims that Zoopla has maintained its lead amongst all property portals in the UK for national consumer brand awareness. The research by independent Harris Interactive (albeit on behalf of ZPG) took place between October 13 and 16, and questioned over 2,000 people across the UK. When asked what property search websites they can think of, Zoopla came top, and according to the research, Zoopla’s spontaneous brand awareness amongst all adults nationally currently stands at 38% versus 35% for Rightmove and just 2% for OnTheMarket. The data also revealed that when asked ‘Which of these property websites have you ever used?’, 45% claimed to have used Rightmove, 36% Zoopla and just 5% OnTheMarket. This reinforces our position to be one of the few agents to continue offering our clients the best possible service by advertising properties on both Rightmove and Zoopla. Whilst many of our competitors dropped Zoopla in favour of OTM due to Rightmove’s strength outside London, the reality is that around three fifths of my enquiries come from Zoopla who certainly seem to be the more favoured portal locally – possibly due to the fact that Primelocation is part of Zoopla. If you want your property to be marketed to 95% of buyers you know where to come!!
Finally Snoopy is coming to town. Many of you will have seen the rather large installation that has appeared in our office and we have already had lots of visitors coming in to have their photos taken on the cinema seats – mine is attached. The real live Snoopy will be switching on the Northcote Road Christmas lights on Friday 27th November at 5pm, as well as visiting the Christmas market on Northcote and Webbs Road on Saturday 28th November so do come along. Santa will be in his grotto as usual on the Friday evening of the lights switch on.