I have just returned from our annual, dreaded week in Cornwall. The first day was sunny and then two days of cold weather. Yes, even in Britain’s heatwave I needed a jumper to sit outside in Cornwall…
But then sun for the rest of the holiday. 5 days of blue sky in total! I think that must be a record for us. Serena and the kids love it but I’m convinced they’re deranged. Every year I suggest that it should be our last visit and every year I am ignored…
Err, McGivern, perhaps you could focus on the London property market?
Indeed! Well, once again we are in limbo – Keir Starmer has resigned. To give Labour credit, they have at least avoided a drawn-out selection process for his successor.
Andy Burnham has gone from not being an MP to Prime Minister in the space of a matter of weeks. Impressive (Liz Truss must be furious), although the obvious concern is that if Starmer et al didn’t have a plan for being in government then does Burnham have anything up his sleeve?
The answer is probably nothing detailed which adds to the uncertainty. Unfortunately, this means that any ideas he has announced in the last decade are being presented as possible policies. But does that sound like in depth analysis or simply people fishing for stories…?
In terms of property, it has been suggested that he wants to scrap Stamp Duty & Council Tax and replace it with a Land Tax of 0.48% per annum of the value of the property. This idea (which is somewhat different to what Burnham is proposing) was first proposed by Henry George in his book Progress and Poverty published in 1879. Supporters of his views in the 1900’s included Sir Winston Churchill and Einstein.
However, saying you would like to do something and actually doing it are two very different things. James Nation, a former deputy head of the Number 10 Policy Unit and currently managing director at political consultancy Forefront Advisers, was interviewed by Knight Frank on what he thought of Burnham’s property policies:
“Don’t take every Burnham comment from the campaign as gospel. The economic advice might be that this is a good thing to do but it hasn’t been done before for various reasons. The complexity involved in the full-scale replacement of council tax, but also I think business rates, would be enormous…
… We are talking about a process that takes years and I think is probably one of those that Burnham might be tempted to kick into the next manifesto bucket… It might be that a process or a consultation is kicked off to have the appearance of being bold, I’m just a bit sceptical of what can change given the time we’ve got left in the parliament…”.
Of course, this doesn’t mean that he can’t try to do something to increase property taxes like increase the high value council tax, but that is really just tinkering around the edges and still wouldn’t come into effect for a couple of years.
In short, the political merry-go-round is spinning faster and faster which simply makes people more hesitant and this is reflected in the figures:
- TwentyCI reported that between April and June net agreed sales were 94% of last year’s levels for the market above £1million and 91% above £2 million.
- Lonres reported that Transactions in the £5m+ market were 7.1% higher in June than the same month last year.
- New instructions in this market decreased by 17.3% over the same period. The number of £5m+ homes available for sale across prime London at the end of June was 3.3% lower than a year earlier.
- Prices in central London fell by 1.7% in the quarter bringing annual price falls to -5.0%. (Savills)
- Elsewhere in London the value of prime properties fell by -1.1% with annual price falls of -2.5%. (Savills)
The anomaly is obviously the £5m+ market. I think this is partly due to many people simply deciding to get on with their lives having become hardened to the fact that uncertainty is likely to be with us for some time. Meanwhile, London is still an incredible city and comparatively safe compared to many jurisdictions.
However, I must also point out that comparing just one month’s figures to another is likely to throw up anomalies, so the information is of limited use. And, as I repeat ad nauseam, pretty much every statistic or “fact” that you will read about “London property” is far too general to be of much use as properties in prime central London vary dramatically.
You absolutely must know what is happening to prices and demand for the type of property you want to buy in your specific target areas. The example I often give is that what is happening to prices for houses on communal gardens in Notting Hill is very different to what is happening to town houses in Notting Hill let alone houses in different areas such as Belgravia, Knightsbridge or anywhere else.
And in addition to that, you will be negotiating with individuals who will have different levels of motivation for selling. So, ignore the statistics for average discounts which are hugely misleading and gather as much information as possible on your target market and the sellers.
There are some exceptional opportunities out there, but they are hidden by an awful lot of rubbish. So, please remain patient and selective. However, be prepared to move swiftly because, while the poor and average properties are languishing on the market, the great opportunities are being bought quickly, often before they even reach the websites.
