“Property prices in Westminster Council have fallen 25% according to the ONS”, said one of my clients last week.
“So why do you think this property is good value?”
The property we had just inspected is extraordinarily cheap for the location, which is one of the best addresses in London, and is a fantastic opportunity. Indeed, my client admitted as much. But, understandably, he was concerned about the figures from the ONS, recently reported in the press.
Unfortunately, those figures are incredibly misleading as they show the average value of properties sold, i.e. if a larger percentage of lower value properties are sold that month, then the prices will be lower. But that is very different to house prices falling.
In short, it is a dreadful metric (as are valuations using the average price per square foot because it is an incredibly blunt instrument, but that is a topic for another day).
Nevertheless, people are influenced by this data, so I asked a very simple question: “Do you think your property has lost 25% of its value in the last year?”. The answer was a firm “No!”.
Now, you might argue that many people in this market think their home or investment property is worth far more than reality and I would agree. BUT… the difference in performance between best in breed properties and the rest is enormous.
As an example, another client of mine has just sold his apartment for more than we bought if for 5 years ago. How can that happen in a market that is down 25% in the last year? And that doesn’t take into account the reported falls over previous years either.
The prime London property is complicated. Values can vary dramatically in the same street and even the same building depending on a host of factors. This is why general figures are so dangerous. It forces an average on people which seems to be credible but is total nonsense.
The key is to stick to the “Best in Breed” strategy so that you acquire an exceptional property at a favourable price. I’m happy to send you more information on this. Just email me at jeremy@mercuryhomesearch.com.
