Crash or Comeback?

Wherever you live, you can’t ignore the fluctuations of London house prices: from lows after the financial crash in 2009 to a peak in 2017, prices here act as a barometer for the whole country. According to data from Savills, property prices in the Capital fell 21.5 per cent in 15 months over the course of the credit crunch, going on to make a miraculous recovery, rising a staggering 95 per cent by 2017. Brexit uncertainty saw a slight subsequent drop, but a return to a majority government in last year’s election ensured that annual growth returned to 2.3 per cent in February this year. The events of 2020 are totally unprecedented though, so what now?

These are certainly strange times, agrees Glentree Estate’s Trevor Abrahmsohn:

“I have been serving this industry for 45 years and have worked through four recessions, but nothing can compare with the last three months,” he says. “The previously thriving UK economy has been transformed into an intensive care patient. Pre COVID-19 we had almost full employment, 80 per cent national debt, very acceptable growth of 1.5 per cent and a tolerably low budget deficit of under two per cent. In a matter of months, this has morphed into an unemployment rate of 10 per cent, 100 per cent national debt, a contracting economy of around 20 per cent and a ballooning budget deficit of 10 per cent.” But when it comes to the property market, it’s not all doom and gloom, he assures us. “The good news is that there appears to be a disconnect between all these horrendous fundamentals and the sentiments of home buyers and renters in the marketplace.”

User figures from Rightmove corroborate this: the site recorded the 10 busiest days in its 20-year history throughout May and June. On 27 May the property portal recorded more than six million visits (18 per cent more than the same day last year), while users collectively spent over 955,000 hours browsing the site on 6 June. And the financial figures are also positive. Rightmove’s June House Price Index showed that the average asking price of property coming to market was up by an average of 1.9 per cent compared to March, with the number of sales agreed recovering from a 94 per cent drop during lockdown to a daily rate of just three per cent down on a year ago.

“The latest figures from Rightmove will make uneasy reading for those who have been insistent on talking the market down over the last few months,” says director of Benham and Reeves, Marc von Grundherr. “Of course, it will take some time before we see market health completely return to pre-lockdown levels, but early indicators clearly show a sustained appetite on both the side of buyers and sellers. A huge uplift in stock entering the market and an increase in the average asking price demonstrates that there has been little to no dent in seller confidence. When you couple this with the fact that buyers are now paying a larger percentage of asking price than previously, it’s clear that any suggestion of a market crash couldn’t be further from the reality we’re seeing on the ground.”

Guy Gittins, managing director of Chestertons, says his agency has witnessed a similar picture. “Property viewings have tripled, while website enquiries, newly registered applicants and offers made on properties have all more than doubled since the market reopened compared to the 51 days of lockdown prior to the 13 May. This clearly shows confidence in property has not been shaken by the impact of the coronavirus.”

Indeed, it seems to be a similar story across the board. “We’ve seen a spike in activity over the last couple of months and had some real success stories,” agrees Nathaniel Wilde, sales manager at Hamptons International. “In June, we launched a handsome first floor apartment in one of London’s premier squares, just off Sloane Street, which had access to a beautiful communal garden and tennis court. It came to the market mid-week and by the Friday – three days later – we had carried out 10 viewings and had agreed a sale almost five per cent above the asking price.”

Meanwhile, at Islington Square, a breathtaking new development by Galliard Homes, Beauchamp Estates actually saw sales go through during lockdown. “Islington Square’s combination of residential, retail and leisure, combined with its close proximity to the redeveloped King’s Cross district is an extremely appealing proposition,” says Paul Finch, new homes director. “While the recent lockdown saw a slowing of activity in all quarters, it did not bring things to a complete standstill here, such is the interest. We saw five deals complete during this time, with new enquiries from both national and international buyers: specifically Hong Kong, Singapore and the USA.”

These aren’t the only reports of lockdown sales, as the daughter of one vendor explains. “My 91-year-old father decided to put his house of 40+ years on the market just a few weeks before lockdown. I whisked him away from London to live with me so that he did not have to deal with the viewings. Parkheath secured an offer from one of the early viewings and the whole process was surprisingly stress-free. We were regularly updated with the progress of the sale. The buyers were pragmatic so that both parties respected the agreed sale price and contracts were duly exchanged.”

So, business as usual? With social distancing measures still in place, not quite. Though the desire to move is there, for some – both buyers and sellers – viewings are a scary prospect. Neil Sloam, managing director of sales at Winkworth, says, “The pent-up demand following lockdown has resulted in a busy but challenging new world that has necessitated a change in our thinking. We now prioritise the health of homeowners, applicants, tenants and staff above all else and have created COVID safety policies based on the government guidance which we ask everyone to adhere to.”

The industry is stepping up with more photography, access all areas drone shots and virtual video tours. And this focus on property technology means that even when travel is not possible, the London market is not closed to global buyers. Beauchamp Estates managing director Jeremy Gee comments: “The current global coronavirus pandemic has unquestionably impacted volumes, as lockdowns and restrictions around the world have affected buyers’ abilities to view and proceed, but this has not brought the market to a standstill. Thanks to property tech and virtual viewings we have continued to receive enquiries from around the world and have been able to assist clients in initial selection, virtual viewings and in some instances, we even helped clients to successfully complete in London during lockdown.”

What has become clear in recent weeks is that priorities have changed for many, says Arlington Residential’s Marc Schneiderman. “Since the pandemic, many of our private clients have completely reappraised their plans,” he explains. “I have spoken to many buyers who were previously looking at properties without outside space, who have now decided they will only move to a property offering this, even if just a balcony large enough for a table and chairs. We have seen first-hand how this re-evaluation has impacted the market, with the sale in the last two weeks of several flats with terraces, including a penthouse in a modern building in Swiss Cottage with an asking price of £4.5 million. It had a large terrace with far-reaching views, which was a deal clincher.” Everything points to the view of the market being equally good.