Those who have followed the property press in the last 12 months may be forgiven for thinking that urban living has lost its lustre or that the smart set has decamped to the country.
Food, fashion, art and architecture are eternal attractions in the city. In London these days, there’s definitely a lot of energy as the capital’s dining rooms and theatres fill with locals and visitors.
Like many of our clients, we were frequently out and about in central London last month, not just for work, but to take advantage of the rich tapestry of cultural events—from Frieze, to Poussin at the National Gallery, to the Summer Exhibition at the Royal Academy.
Latest figures show a lively property market, with sales activity up compared to last year and even looking more busy than 2019
According to Savills, through September 2021 there were 352 transactions in the UK capital of properties of £5 million or more, compared to only 348 for all of 2020. LonRes reports the number of sales at £5 million+ was 39% higher than the 2015 to 2019 average; those of £2 million and up were 21% higher than the 2015 to 2019 average.
As for that big shift to the country, figures from Knight Frank reveal the number of buyers moving from urban to rural peaked in January 2021 and has been declining since.
Limited choice in perennial hot spots like Notting Hill and St. Johns Wood and in family-friendly locales like Wimbledon, means some savvy buyers are finding value in London’s less famous leafy districts such as East Sheen.
Increased activity in new prime central London (PCL) developments
The pandemic put the usual champagne-and-canapes receptions on hold when the launches of luxury developments were postponed. But London agents stayed busy previewing marketing suites and visiting sites on behalf of their clients who haven’t been able to travel.
Anecdotally, in last eight weeks we have heard a lot about sales activity in PCL developments such as No. 1 Grosvenor Square, Regent’s Crescent, and Park Modern. This is often a sign that international buyers are back—though not in the usual numbers—but certainly more than when travel restrictions were in place.
Rental prices reach pre-lockdown peak
Not too long ago (see our Perspectives, February 2021), during the pandemic, rents were 30% down, and landlords had to lower their expectations. The situation has certainly turned around, with rents up 11.7% from September 2020. Now tenants shouldn’t expect discounts, and they face stiff competition given the low level of stock, which is down 68% from this time last year, according to LonRes. And, according to PrimeResi, two indicators—the monthly total for tenancies started and the average quarterly rental value rise (2.8% in prime central London)—both hit their highest in a decade this September.
No property surprises in UK budget announcement
Finally, we couldn’t post without a comment on the Autumn Budget. Since the update last spring, there have been no new major developments concerning property. Last week’s announcement was pretty benign, which indicates the Treasury perhaps has other priorities.
For several budgets in a row residential and international buyers were targeted; however, there is no further fiddling except for a change to capital gains reporting rules. The deadline for reporting and payment of Capital Gains Tax on the sale of UK residential properties is to be extended from 30 days to 60 days. According to law firm Farrer & Co, ‘Property investors and Trustees navigating the UK’s Trust Register for the first time will welcome this relaxation and the more generous time allowed for reporting and calculating tax on more complex sales.’
Facts matter, but so does sentiment
When looking at the property market most people want to see a clear, well defined trend. They can choose from a seemingly limitless number of information sources. But with the abundance of reports, blogs, and updates from experts, you risk going down a rabbit hole or suffering from analysis-paralysis.
As we’ve noted before, the UK and London are unique markets. Average statistics provide a useful snapshot, but they don’t reflect the nuance of a specific neighbourhood or a particular property on a given street. It’s important to be aware of some of the high-level talking points, but insight only emerges with focus. An appreciation of context will always help make sense of the risks and opportunities of any major investment in a dynamic market.
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