Brexit and its effects on Prime Central London opportunities
This article was written by Henry Sherwood, a Qandor member. To know more about his company, The Buying Agents, click here.
With Brexit looming it is impossible to avoid the subject and the associated No Deal pessimism. There has been much speculation on how it will affect the UK property market but most of this thought is purely opinion and not fact.
The fact is: no one really knows, and it is virtually impossible to tell what the real effects will be. Property and economic cycles are fairly straightforward to predict but political situations can be rather tricky.
So, what do property buyers do now? They could wait until there is more clarity and hope their desired market conditions return. As with most things in life though, “hope is not a plan” and this approach could see you “sitting it out” for some time. It could be months or even years before normality, whatever that is, returns.
Whether buying a home or for investment the ideal scenario is always buy low, sell high. This sounds simple but the reality is more complex. Very few people outside the property industry ever actually predict the bottom of the market. They rely on the industry experts and market news to tell them when the market has bottomed out. Great in theory but the reality is that thousands of other potential buyers from all over the world also have the same strategy and are waiting to pounce. I’ve seen a few downturns in the last 30 years and it always amazes me how quickly a market can recover when driven by pent up demand. The demand returns overnight and so do Seal Bids and Best & Finals, the most efficient way to increase market value in the shortest amount of time.
Everyone has their own view on what to do next. Some will sit it out while others can’t wait to take advantage of the situation.
Prices in Prime Central London at the time of writing appear to be bouncing at the bottom. There is still massive uncertainty, and in some cases, this is being factored into many asking prices for a quick sale. These artificially low prices and “the experts” covering themselves warn there may, or may not, be further falls of 5 – 10% if there is no deal, create the ideal scenario for negotiating really hard and not feeling guilty about it. We have been surprised at the level of some offers being accepted; it is great for our clients and provides a healthy margin should prices slip a touch more. Our clients will still come out ahead.
A word of warning though: do not confuse asking price with market value. There is still so much overvalued property on the market. Negotiating an amazing “discount” means nothing if the asking price was over inflated to start with. In addition, beware of over paying for off-market property. We all know the genuine reasons for selling off-market but there is a definite trend of “vendor valuations” being swept under the “off-market rug” to avoid a digital footprint or the agent losing credibility of marketing over valued stock. There has never been a more important time to seek objective advice or retain a good buying agent.
There is even more good news for some buyers. Not only has the market fallen by 20-25% since June 2014, the pound has also weakened against most currencies in the last 5 years. Against the USD it has fallen over 25% since July 2014 and decreased by 20% against the EUR since Nov 2015. To put this into context a £5M house in 2014 would have cost $8,000,000. Today the same house would cost £4,800,000.
All figures and statistics were correct at the time of publishing.
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