The bottom line is that investing in a central London property is always going to be a solid investment and unlike stocks and shares, you can live in it.  As the old saying goes, ‘You can never pay too much for a property in London, although you may pay too early’.

Personally, I’m confident that this new coalition can sort out the shambles that is the British economy under a labour government.  The full implication to all of us personally will not reveal itself until the end of this year.

 Uncertainty is everyone’s fear, so regardless of the positions we are all in at the end of 2010, I expect price rises to stabilise at approximately 10-12% in 2011.

For the second month running, the amount of property available for sale is steadily growing.  It is still less than this time last year, but only by 7%.  The number of new properties coming to the market is also healthy – not as many as in January, but still 40% more than February 2009 and likewise valuations are up 32% for the same period. 

There is still a strong desire to invest in London property with sales applicants remaining at the same high level as January and the number of sales agreed higher than in any of the previous 12 months and 38% more than February 2009.

Prices in Central London will therefore continue to rise, as heavy demand remains. However, with more stock slowly becoming available, the rate of price growth should begin to slow.

Residential Lettings

We reported last month how concerned we were about the lack of supply in the rental sector and regrettably, February figures have not provided any reason for optimism.  The last time D&G did so few rental valuations was December ’08 (not a notoriously busy month in any year).  The total number of properties available to let fell again in February, although only fractionally, but it is still 68% less than this time a year ago. 

In January, Douglas & Gordon reported more prospective tenants registering than ever before.  However, in February, registrations fell back to a more normal level, similar to this time last year.

The reason for this continued lack of stock is predominantly landlords deciding to sell as the value of their property recovers. Even though the demand for rental property is slowing (because investing is now seen as a better option and because seasonally this is a quiet time of year), rental values will still continue to rise because of the continued lack of stock.

Sarah has obvious charisma and appeal and it’s all too easy to denigrate agents and jump on the bandwagon. I wish her all the best with her site which is well thought out, slick and deserves to carve out a niche for itself. Private sales are not new and have in the past been the preserve of the bargain hunter, either buyer looking to buy without competition, or seller trying to avoid paying an estate agency a fee. 

The common link here is “bargain”.

 Just for a minute picture a future with out estate agents. When your heart has slowed down from the sheer excitement of it try to imagine how you, as a seller, might work out how much your property is worth. In the absence of estate agents you’ll look, like your mortgage valuer, at historical perspective and eventually opt for a figure, for without professionals (bear with me here) how are you going to gauge where the market is. If you choose to simply believe what you read in the newspapers you’ll probably get it wrong. If there’s ever been a country with a multitude of different micro markets this is it. If you want an example of how difficult it is to assess value try using a blunt tool like zoopla.co.uk. 

As sellers, and this is true of the majority of Brits, we are NOT all consummate salespeople and if we set a price [remember in this scenario without agents it’s a backwards looking price] the chances are we’ll accept the first offer at that price and then stop showing it. This has all sorts of issues insofar as almost 40% of all deals fall through, but ignore that for a moment and look at the bigger picture. 

This Country has become strong and vibrant to some extent off the back of a vibrant housing market. The reason for this is because any property being sold is valued forward. A professional estate agent will assess conditions, number of buyers and trends and will see how far he can push the value in order to do the best for the seller. This has worked for many years and because we’re a nation that enjoys welcoming foreigners it’s an international market too, so there are many factors to consider. Not only will a good agent have a significant list of buyers and value forward, but they’ll assess bids as they come in, qualify buyers and determine whether they’re time wasters as so many are.  But most importantly they’ll decide if a property needs to go to best bids thereby increasing the potential for upside for the seller, who is the one paying for the service. In other words the property will be sold ultimately for the market value, not to the first person that offers an abitrary asking price.

 All the above add value, clearly and demonstrably. 

The idea of saving money always appeals and is particularly meaningful in a difficult economic environment such as we have at the moment so it should be remembered that estate agents are in a service industry and that our fees are always negotiable. Negotiable doesn’t always mean lower by the way, incentivised fees so the owner and the agent win at a higher price, and share the pain if it’s lower, are always worth considering. 

If the British public have had so many problems negotiating fees down, and we are currently the cheapest Country in which to sell property in the developed world, so let’s not run away with ourselves, you have to wonder how they’re going to get on negotiating the sale price of their biggest asset face to face with a buyer. The idea of anyone seriously considering selling their property without professional advice is ludicrous, and moreover I’m guessing that anyone currently selling on a private website has arrived at their price by first asking the opinion of local agents.

The mortgage issue makes some sort of sense as the recovery in house prices shouldn’t necessarily be viewed AS a recovery. Whilst we’ve seen some prices rise the market is still stalled, mainly because of difficulties in raising finance, and is in no way comparable with the market is 2007. When I say this people pointedly alludedly to the fact that some 2009 prices are way over 2007, but the vast majority are still well down and showing no signs of a quick recovery. We are a long way from a “normal” market and D&G’s jump in market share from an average of c. 6-7% across all our areas to almost 12% is, sadly, less likely to be a huge increase in our levels of business but more a question of our volume holding up whilst the market volumes continue to stay suppressed.

A return to sensible lending criteria is still the way forward in the long term (and I’m old enough to remember when they WERE the norm) and we’re a long way from that even if some of the mortgage brokers we’re friendly with tell us that some (HMG owned) banks are still lending 5 times income. Let’s not forget that some people ARE still in good jobs and ARE being paid, so you’ll no doubt read of some hysterical response to this sort of lending, but it is now rare and not the norm. We are perhaps luckier than some, as a business, in that we deal with a larger proportion of these people than other agents, but with absolute numbers of transactions still not far off half what they were at the peak and mortgage advances creeping up in low single digit increases there’s a long way to go yet.