It is never easy to be sure when a market has bottomed out, yet I am increasingly confident that the prime central London market is on an upward trend.
January saw numerous deals agreed, largely because of the underlying feeling that the market is on the turn. I have had several conversations with other colleagues in the industry who also had increased business at the end of 2017 – positive for all.
As the pound continues to strengthen, foreign and British buyers are no longer sitting on the fence and are choosing to invest once more in central London.
The lowest point in the market was reached during 2017, buyers and sellers alike have realised this, and smart operators are not ignoring the signs to invest.
Of the agents surveyed by LonRes in their Winter Report (incorporating sales data from the final quarter of 2017), the great majority (71 per cent) expect transaction volumes in 2018 to exceed those in 2017. They are equally bullish about lettings, with 59 per cent expecting the number of properties let in 2018 to rise, compared with just 9 per cent who expect a fall.
The outlook on property prices is patchier, with some uncertainties over Brexit. Property prices in prime central London fell by 1 per cent in the course of 2017, with properties valued at under £2million registering a slightly higher fall (2.7 per cent) than the more expensive properties.
And, as so often happens, when sales stutter, lettings prosper. Lettings values in prime central London in the fourth quarter of 2017 were up by 6.3 per cent and closed the year 3 per cent up on 2016 values.
There is one final interesting point in the LonRes report.
According to the influential Association of Foreign Investors in Real Estate, London has now replaced New York as the top global city. The Association’s annual survey, which was conducted in the final quarter of 2017, and which canvasses the opinion of real estate investors across the globe, also found that Brexit is less of a concern than in 2017.
Forget the political rhetoric – and there is going to be a lot of it in the months ahead. As we are seeing on the ground at Henry & James, seasoned investors are looking more favourably on London than a year ago – which bodes well for 2018.
James Bailey is the Chief Executive of Henry & James, Belgravia and Chelsea’s premier estate agent for residential sales and lettings.