Cautious optimism is the name of the game for PCL in 2021
We’re two thirds of the way into January and dare we say it, but the year has started very positively, with the vaccination programme and general hopefulness bringing a continuing optimism for the year ahead. At least for the first half anyway.
The Prime Central London market has generally been a bucker of trends and pretty resilient to market and economic fluctuations and this was certainly the case for 2020.
While there was a small drop (of 2%) in PCL prices last year, the view is that this was largely attributed to the ongoing alignment of prime property prices rather than down to the global pandemic. PCL stock increased in the latter part of 2020 and this is now filtering through into 2021, with an increase of 44% (year on year Jan 20-Jan 21). Good news for committed buyers.
There most certainly is a market, and people are still in the mood to move
The PCL market was largely driven by houses over flats, with house purchases making up 27% of activity, but 50% of spend. Houses have visibly been outperforming flats in both sales and lettings (as highlighted in the recent Bloomberg article that revealed luxury rental flats are lying empty across the capital). Laterally appointed, spacious mansion flats will certainly be in demand, possessing both space and the luxury of porterage and central locations.
Prime country markets have certainly profited, but while many agents are reporting a migration from the city to the country, there will still be a core set of buyers who want to remain central. However the focus is on practicalities over aesthetics; more generous living space, extra rooms and versatile interiors (for home-working and home-schooling), good communications/connectivity and outdoor space.
Buyers are more committed and efficient
The effects of the pandemic could have led to a fear of commitment and a fear of making decisions, but actually we've seen the reverse. Buyers are very committed, making much more practical, quicker and efficient decisions. There has certainly been a momentum towards reevaluating life, lifestyle and home and this has led to an uptick in demand and properties going under offer.
PCL has always been underpinned by international buyers, but there are two types and while some brave overseas buyers have purchased unseen, it's the foreign buyers already resident in London who account for the majority of international investors taking advantage of the buyer's market.
On both the domestic and international front, we will see whether there is a global impact on HNWIs as the year moves on. At the moment, it is the lower rungs of the income ladder that are being affected, but this is bound to have a ripple effect and impact further up the ladder.
Similarly, while the stamp duty holiday has not really affected the upper prime market in terms of cash, it has certainly been an overall driver to boost the market all the way to the top, so it will be interesting to see what happens over the next few months when the government decides whether to ‘end or extend’.
Prime Central London is as resilient as ever
Overall, the PCL market remains as resilient as ever and 'prime' is still considered safest in terms of investment and price stability, but only if sellers are realistic and prepared to be flexible.
So while buyers need to maintain a level of caution, and sellers a level of realism, we remain very positive in outlook for a buoyant first half of 2021 and have a great selection of fantastic opportunities for the confident and committed client.
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