There has been a lot in the media lately about “the wobbles” in the property market, and buyer uncertainty. However, from our office in Fitzrovia, Central London, we have continually noticed a strong level of buyer commitment. Buyers who have already been committed to purchases have held fast in their desire to see them through.
If we take the conception of The Truss government as our starting point, the LDG sales team have only seen one transaction drop, from a strong and varied pipeline of sales. In this case it was because of an interest rate play where a lender managed to get out of honouring a mortgage port; it had nothing to do with buyer desire.
So, why are purchasers remaining robust in their prospective? Well, what we’re not seeing this time is blind panic. We mainly work with discretionary buyers and sellers; buyers who have strong cash funds and who are focused on buying the right place. And the fact is there is a scarcity of stock.
Unlike the Suburbs or Home Counties, there just isn’t a multitude of choice in central London. You won’t find a selection of 10 fairly identical two-bedroom homes to choose from. Stock levels, driven by discretionary sellers, are never high, and this is before the multiple variables of lease, micro-location and architectural styles are introduced.
Buyers also realise that with the cost of entry being circa 10% (Stamp, Legals etc), their purchases need to be more generational focused. By this I mean, buy, and hold for 10-20 years. The days of assumptive short-term growth in prices paused around the time of the 2016 referendum. They might return but currently, with purchase costs being so high, buyers are focused on a long-term holding strategy. With these considerations, whilst the price of entry is significant, it’s the importance of the right space that takes precedence. This itself has a knock-on effect, with buyers becoming much more conscious about lease lengths and are more reluctant to get involved with extensions.
Our experience from the last few months is that buyers with a focused purpose still want to buy correctly priced properties in the West End, but their focused is now towards generation holds.
