Welcome to Thorgills first monthly market update, a brief snapshot of the activity we are seeing in both the West London sales and lettings markets. Firstly, it’s worth mentioning that although West London can be seen as one market, micro markets exist within West London and varying levels of available property will always affect the supply and demand dynamic, naturally impacting on pricing.
June has been a very interesting month, the EU referendum has led to a mass of uncertainty regarding implications on the property market, but also coupled with the overshadowing reach cast from the government a few months back, when they increased tax on second home ownership.
Throughout June and the second half of May buyer activity reduced, new instructions were not coming to the market quite as quickly as they had for the previous four months, as sellers were delaying decision making until the referendum votes had been counted. This is not to say market activity ceased entirely, with a number of sales agreed and exchanges finalised throughout the month, we were happy to report some fantastic individual results.
The lettings market has undergone a bit of an overhaul in recent months, with changes to the deregulation act impacting on serving notices correctly, safety legislation updates involving smoke and carbon monoxide detectors, the introduction of the tenants right to rent checks and of course the governments new 3% tax on second home ownership. Even the most experienced landlords have felt stretched with the changes, thankfully Thorgills have been on hand to guide clients through the minefield, but this has led to varying availability of property from area to area, with some clients rushing to increase their portfolio before the tax changes, whilst others have been deterred from the perceived negativity.
In general, the property market has seen a lot of changes and uncertainty over the last few months, outside factors have impacted on peoples decision making but this will always be the case, it’s just that generally speaking the factors experienced are normally a little more spread out, and perhaps not such nation encompassing events.
The end of June has seen what most are describing as a ’shock’ decision from the UK to leave the EU. Whilst many predicted the vote would go the other way, the nation has spoken and it is time to move forward. As an organisation we saw an instant change in market conditions, it was as if a weight had been lifted and people were free to begin making solid decisions again.
The uplift in both new sales properties entering the market as well as buyer registrations was significant, surprisingly the lettings market was also impacted. New tenants registering had reduced in the two weeks prior to the vote, but as with the sales market, tenant interest increased following the result, leading to a very busy ten days with a huge uplift in properties going under offer, when compared with the same period last year.
Now the dust has begun to settle, the crystal balls have started to surface, with wide spread predictions built around reduced sales activity and possible price reductions. No doubt there will be a noticeable impact on the market, we are not naive and know that over the next couple of years agents will have to provide clients with real value, working harder to ensure success. Its important to remember that people will always have to buy and sell, irrespective of market conditions, those going through life changing events will continue to drive the market. What we anticipate is a reduction in window shoppers, those buyers with lists of property requirements as long as your arm, that inevitably decide to stay put. This is a good thing, by removing the less motivated buyers from the market we are able to concentrate on the activities that guarantee a sale, ensuring customer service is delivered to the highest possible standards.
The lettings market offers some very interesting opportunities, with the weakening pound attracting foreign investment to the capital and offsetting tax implications, we anticipate an increase in modern, new build apartments entering the market over the next six months. This increased supply to the market could lead to a negative impact on achieved rents, but we also anticipate an uplift in European tenants entering the market, as they move to the UK before the UK formally leaves the EU. It is very early, and the widespread reporting of racist and xenophobic behaviour could impact on many peoples decision, but given the opportunities the UK offers lower income earners, we do anticipate the number of new renters increasing over the next six to twelve months, potentially leading to rent increases.
Whilst we respect other industry commentator’s uncanny ability with a crystal ball, we prefer solid data analysis. Sometimes the data can be anecdotal, we speak with hundreds of buyers, sellers, landlords and tenants every week and opinions count for a lot, especially when considering market confidence. At the moment the data says the lettings market is buoyant, with a strong level of properties available and renters considering their summer move. Sales activity is steady, the last few days has seen buyers levels rise again and many sellers discussing their marketing plans with a view to going ’live’ very shortly.
Thorgills opened our doors in the summer of 2008, three months before the worst financial crisis the UK had ever experienced, and the same was true then as it is now. The property market, specifically in London, is as close to a bullet proof investment as you can make. Many agents have survived for years in a buoyant market that in all honesty, only required the agent to open the door and let buyers in, now as the market becomes slightly tougher it’s up to the agent to provide exceptional service and really work for their clients.
In eight years Thorgills has grown to become a highly recognised, five branch West London based agency. The reason for our success during this time? Our team, we don’t recruit ’experienced’ estate agents, we recruit based on beliefs, drive and determination to provide exceptional service. As you would expect, this approach gets the job done and nothing breeds success like success. In our opinion, the next few years will require some hard work, but will also provide a mass of opportunity for our clients.
Average marketing prices for June (based on zoopla data)
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