A tale of two cities: why savvy HNWIs are looking to West London
Partner Charles Miéville explains why Notting Hill continues to be a popular choice for high net worth clients looking to buy in London, and observes how the wider PCL market appears to have split into two halves…
It appears that it is not all doom and gloom in the London property market, despite the trials and tribulations of an extended and uncertain Brexit process and seemingly ever increasing and more widely reaching, property taxes.
Lonres has recently reported a 3.1% house price rise in Notting Hill in the year up to March 2019, with average prices in the six months between October 2018 and March 2019 standing at £1.9m. How does this reconcile with an average annual price drop in Prime Central London of 5.5% in the same period?
In terms of Notting Hill specifically, the local market has always attracted an international buyer, with its cosmopolitan shops and restaurants, and its reputation precedes it. Couple this with excellent local schools, access to green space and a wide mix of properties from lateral period flats and new developments to period houses (often wider than those found in neighbouring areas and therefore offering better space), and its desirability is obvious. The young and vibrant atmosphere of Notting Hill particularly appeals to those who are buying for their children either for schooling and career reasons, or increasingly for inheritance tax planning purposes. As prices in other areas have increased (particularly East London), Notting Hill will have increasingly appeared better value, perhaps tempting buyers who would originally have been priced out, which has helped to push up prices.
We have also experienced older sellers, who have lived in their properties in Notting Hill for many years, and who do not need to sell. For many buyers however, life goes on, and they now need to upsize or relocate for work or family reasons, putting pressure on the few houses that do come to the market at the moment.
In our experience, the price rises may not be limited simply to Notting Hill, although it has clearly experienced higher demand and prices of late. It is clearly driven by the lack of supply of good property in very particular locations, but coupled with a sustained level of demand from buyers. There is a recent increase in the amount of desirable family homes in different Prime Central areas going to sealed bids, while other properties linger on the market for many months. What we have experienced is sellers not necessarily needing to sell, but wanting to see how the market fares in due course. Many agents have been having conversations with potential sellers off market – everyone has a price for which they would be prepared to sell, and as these statistics are not public (only the eventual sale price), it is difficult to clearly see how buyers’ and sellers’ expectations are matched.
There is talk of the government introducing a further 1% surcharge, in addition to the 3% surcharge on SDLT, for non-resident buyers, which might also lead to purchasers bringing forward any plans to acquire new property ahead of tax changes although it is not clear whether this is widely considered at this stage or whether it is having any impact on people’s buying decisions.
The current political climate has led to a very favourable exchange rate, and foreign buyers are able to take advantage of this. The risk of property prices falling further is always a concern, although many of the buyers (whether local or foreign) that we are dealing with are taking a longer-term view and are less concerned by short term price corrections, with properties being bought for family reasons, as outlined above.
For some buying in the smartest neighbourhoods, the price (and associated taxes) may not be as important for them as having a home in their desired location. Irrespective of what happens in the UK politically, London will hopefully continue to be a multi-cultural hub, geographically well located in terms of worldwide time zones and with top class shopping, dining and cultural offerings, something that one would hope Brexit will not impact.
One estate agency has recently called the bottom of the market. Given the ongoing political and worldwide economic uncertainty, this may be a bold move, but it may also lead to buyers jumping in to get ahead of the curve on any price rises. What is clear is that there is a market of two halves – highly desirable properties in short supply are selling well, and often above asking prices, and this is skewing the figures for what is more generally speaking a tricky market.
This article first appeared in PrimeResi on 23 April 2019. For similar articles visit primeresi.com.