‘Good news’ or just ‘spin’: Is demand for property in NW3 really up almost 80 per cent?
- Credit: Polly Hancock
A new report claims that demand for property has surged in areas such as Primrose Hill and Belsize Park, but the reality is a little more complicated
Buyer demand for property in the Primrose Hill area is apparently up 79 per cent this year, making it the fourth most popular place to buy in London after Chiswick, Islington and next door Belsize Park.
Hybrid estate agency eMoov compared the number of properties listed on major online portals to those sold in order calculate the level of demand in each area.
Demand for property in Belsize Park currently ranks at 18 per cent, up 36 per cent in 2017 but down 2 per cent annually.
The report hypothesised demand for homes in the area has resulted some of the best price performance in London in 2017.
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Zoopla shows asking prices in Belsize Park have gone up nearly 3 per cent in the past 6 months. The area has traditionally proved a safe bet, with property prices up 38 per cent since 2012.
CEO of Emoov Russell Quirk said that it was a sign the prime central London market was finally “looking up” again.
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“Finally, some good news for London’s high-end homeowners who have seen their property potential decrease substantially over the last two years,” he said.
“It would seem areas of the market have really started to thaw since the start of 2017.”
Demand for property in St John’s Wood has almost doubled since the start of the year, up 92 per cent, although with current demand at 8 per cent it was only 14th on the list.
It was just behind Marylebone which, despite a resurging popularity in recent years saw demand plunge 30 per cent annually. The only area to perform worse was Maida Vale, down 38 per cent.
However, for agents on the ground it’s not quite as simple as properties listed online versus sold.
Buyer registration is down in areas such as Belsize Park and Primrose Hill, with only those motivated by the need to up or downsize looking to sell and buy.
“You can make the look figures look better than they are. They’re saying demand in Belsize Park is up but it’s not.
“Buyer registration is down, not just here but across the board. We’ve got half the buyers we had this time last year,” said one Belsize park agent.
“Demand in general is down, that’s why more properties have been reduced as things stay on the market longer. If you go on Rightmove you can see the amount of price reductions, daily.”
Transactions dropped so steeply following the stamp duty changes in April 2016 that data gleaned from that period can be misleading.
Sales were so low last summer that an uptick could appear as a spike in demand, when in reality the market is only just moving again.
The simplest way to take the temperature of the market is by looking at prices.
“Prices have come down because there isn’t as much demand in the market place,” explained the Belsize Park agent.
“If there was everyone would be scratching for the same properties. That’s why prices go up: people bidding for the same property.
“If you want to sell you’ve got to move with the market or just don’t sell it.”
It’s not all “doom and gloom” though, they added. People are still buying when they have to, and low interest rates mean mortgages stretch a lot further.
“Money is so cheap at the moment that if you can afford to move and sell then why wouldn’t you buy?”
Selling is often the issue, and it can be hard to get chains going. But buyers who are prepared to bet that prices will have recovered in, say, five years time, are well placed to take advantage of historically low interest rates.
The prime market has been particularly volatile over the past few years. Stamp duty changes, the 3 per cent surcharge on additional homes, the uncertainty around the referendum result last year and this year’s snap election has disproportionately affected areas with high levels of homes in the £1.5 million plus bracket.
The LonRes Summer Review noted that “deciphering what is happening to the prime market [is] more difficult than usual.”
The number of properties on the market on July 1st was up 11 per cent annually for prime central, which covers NW1, NW3 and NW8 postcodes. However, the number of transactions fell 12 per cent since last year’s stamp duty changes.
The situation has created a multi level Mexican stand off between buyers and vendors. Vendors have to be motivated to put a property on the market, with many withdrawing rather than accept a lower price.
Meanwhile buyers have to decide whether to take advantage of lower prices and less competition or hold out for even lower prices but risk missing a window of opportunity.
Prices across prime London have fallen, down 4.4 per cent in prime central and 2.5 in the prime fringe. Prime London, including the north London postcodes, fared better with a drop of only 0.8 per cent.
The properties that have been most negatively affected by the market conditions are smaller ones popular with second home buyers and investors, whose purchase would incur the new 3 per cent surcharge.
There was a 29 per cent fall in the number of studio and one bedroom flats sold in June 2017 compared to the same time last year, versus a 13 per cent fall in the purchase of flats with three or more bedrooms.
Poorer price performance and smaller properties could possibly why the eMoov report showed demand dropping for central areas such as Marylebone and Maida Vale.
“For people who have been working in the industry for the last 17 years there is a sense of uncertainty (that word again), prevailing in a market where there has been a bull run,” commented William Carrington, chairman of LonRes.
“For buyers, there is no return to the 10 per cent per annum capital appreciation that could be expected.
“For sellers, the asking prices of 2014 have gone.”