As we're now moving in to February of the new year, even dry Januarys are over and certainly Christmas is a distant (but hopefully pleasant) memory.
Welcome back to the working world; and what a one January has thrown up for us. Donald Trump is now the leader of the free world and is setting a cracking pace at reducing that freedom. The complete reversal of what was, I thought, widely accepted social, economic and diplomatic norms seems to be the order of the day. I'm finding it quite testing to (possibly) accept that what I believed and have been encouraged to think by people involved in my growth as a human being over the course of my life seems to be quite materially out of kilter with a significant proportion of the British and American populations. Interesting times!
With these huge tectonic plates moving around it is so difficult to prophecise as to what effect this will have on the economic strength of London and consequently its housing market. We've seen the pound devalue significantly since the referendum and the £1/$1.25 level seems to be where it is resting. At this level I would have thought property assets should look pretty to cheap to many foreign investors but with Trump tossing grenades out every day it is hard to pick a steady path. Triggering Article 50 has now been agreed convincingly by Parliament so we are at least, beginning to find a somewhat clearer path of action (even if some of us don't agree with that path). It seems much of Europe still has elections and the potential for serious tumult to come so hopefully we are ahead of that turbulence.
On a more local level, we have seen what is a fairly seasonal uptick in business go through in January. This is rather expected as there is a latent demand which builds up over Christmas with all the agencies being closed and both renters, sellers and buyers all seeing the dawn of a new year as a chance to change their surroundings.
In terms of sales, in the really premium locations of London (and assuming there isn't a surfeit of new builds close by) I feel vendors need to reconcile themselves to the new reality of a realistic sale price of possibly 20% below where it might have been 12-15 months ago and, if they can stomach that, push on. If it's a new build it could well be more than that. I think once these floors are set and people can mark-to-market realistically the sales market will begin to pick up again. At the moment, very few people want to accept that reality. In the markets which are served by more local buyers, however, prices are soft but not under such downward pressure so should hold up a little better.
In rentals, there will also be weakness this year. Vendors in the above category, who can't face selling below what they thought was an achievable price could well start to push sales properties into the rentals market. An increasing proportion of the big, new build developments will also begin to come on stream. Although I can't see politicians sending back the 3.3m EU nationals living here, the rate of immigration will, undoubtedly fall and thus also the demand for rental property from this sizable sector. Another sector which could increase the long term rental supply is the Airbnb market. Airbnb has recently changed its listing rules whereby if you are renting a whole unit (rather than just a room in your house) you can only do this for 90 days a year. This came into force from 1st Jan so from around April/May onwards it may be that a considerable proportion of this former sector comes back to the long term rental market.
However, as rents haven't and won't fall as steeply as sales prices already have, rental yields will begin to look more healthy. These have been ridiculously small for a number of years - to an extent that in some cases people seem to disregard them in their investment decisions altogether. Hopefully this criteria will begin to improve in 2017.
On the home front we have recently sold this property in N7. This was marketed just before Christmas at £995,000. Within a few days we managed to receive an almost asking price offer and get all the relevant documentation out before we closed the office on the 23rd. The sale completed last Friday with both a very happy vendor and new owner (whose daughter has GCSEs in 4 months and needs a bigger bedroom to crack on with her studies!)
Finally, and on a completely different note, when I am crossing London to see various different properties I try to use this lost time as constructively as possible. Sometimes this involves me listening to the lives of people far more accomplished than me on Desert Island Disks. While there has been a lot of coverage of David Beckham being on the programme, it is a different David that I think is a man for our time. I would recommend wholeheartedly that you listen to this podcast if you can.