Date Published 28 November 2012
West End estate agents, LDG, believe that the property market will stabilise in 2013, and those wishing to sell should beware of unrealistic price per sq ft values set by exemplary new property developments in London’s West End.
Laurence Glynne, Partner at LDG, comments: `We’ve seen a shift in attitude from vendors, who now understand price per sq ft values (rather than a property being priced on the number of bedrooms), but sometimes, their perception is skewed because they are aware of new schemes in the area and the prices these schemes are achieving.
For example, at Fitzroy Place, a unique new development with top-of-the-range specification, the average price per sq ft is £1,500 - £1,700, whereas the general market value in Fitzrovia is £1,150 - £1,350 per sq ft. Fitzroy Place can push the boundaries because of its design, location and appeal to both UK and domestic buyers/investors. In reality, however, a second-hand flat around the corner will not achieve these prices, especially in a market where buyers are much more price sensitive.
`As such, it’s been a tale of two halves this year; property that’s priced correctly has sold well - sometimes after competitive bidding, but anything that’s deemed over-priced has stuck on the market. For example, we valued a private mansion flat (580 sq ft) in Fitzrovia in the summer at £625,000; another agent advised £675,000 and subsequently won the instruction, so it went on the market for that price. Not surprisingly, it didn’t sell, so it was reduced to £645,000. It has been reduced again to £625,000 and as yet, hasn’t sold. Meanwhile, we marketed a high-quality Fitzrovia flat (652 sq ft) in the summer for £699,000, it went to best bids and sold substantially in excess of the asking price. We believe this
was because the property was priced attractively enough to generate considerable interest, and this is just one example of several transactions that followed the same trend.
`It’s important that anyone wishing to sell bears this in mind in the New Year – with the economy still fragile, buyers are very price conscious. That said, the West End will remain a good place to buy and sell – the infrastructure investment and Crossrail services are going to be good for values in the long term.`
Whilst LDG anticipates that the sales market will remain steady in 2013, the West End lettings market is suffering the effects of the financial downturn, as well as a fall in student population. Lettings prices have fallen by up to 10% in the last quarter of the year, especially in the larger and more expensive units (above £1,000 per week), and up to 5% in the medium size units (above £600 per week).
LDG’s lettings manager, Javier Carrillo, comments: `Due to the current economic climate and city redundancies, the demand from professional tenants is waning, and they are much more conscious of budgets. In addition, we`ve seen a falling student population largely due to excessive fees (some courses are as much as three times more expensive than last year), as well as fewer European students whose parents may be suffering with the financial crises. As such, landlords need to ensure that their properties are priced competitively so that they let quickly.
`On the positive side, we’ve seen an increase in the number of landlord’s instructions, because of our price advice, rent warranties and in house management. This gives the landlord more confidence to rent in these very difficult economic times.`