South London Property Market Stagnant as Stock Levels Surge

A new report has found that the south London property market is stagnant, with stock levels surging by 15% since the start of the year.

What? A slow down? But London prices only go UP!

Well here it is: the research, conducted by the House Buyer Bureau, found that there are now over 720,000 homes listed for sale in England, marking a 9% increase on the same time last year.

Rutland is the county with the most oversaturated property market, with a 26% increase in for sale stock levels compared with the start of the year. Herefordshire, Wiltshire, Dorset, and Somerset are also seeing significant increases in stock levels.

On an annual basis, the Isle of Wight has seen the largest increase in for sale stock, up 27%. Shropshire has seen stock levels increase by 25% year on year, with Lincolnshire, Herefordshire, Cornwall, Devon, Staffordshire, Worcestershire, North Yorkshire, and Nottinghamshire also ranking within the top 10. The only city bucking the trend is Bristol, where available for sale stock has fallen by 9% since the start of this year and sits some 21% below the second quarter of 2022.

What does that mean for London?

As an experienced estate agent in south London, I can tell you that this is a clear sign that the market is slowing down. Buyers are becoming more cautious, and sellers are having to lower their asking prices in order to attract offers. Does this translate to south London? Yes it does to some extent, because nationwide sentiment does have an effect on the market locally. London behaves same, same, but different. Pricing is key.

Is It Time to Sell?

If you're thinking of selling your home in south London, now may be a good time to do so. With more homes on the market than ever before, you're more likely to get a good price for your property.

Of course, there are some factors to consider before making a decision. The cost of living is rising, and interest rates are expected to increase in the coming months. This could make it more expensive to borrow money to buy a new home.

Ultimately, the decision of whether or not to sell your home is a personal one. However, if you're considering it, now may be the time to act.

If you're thinking of selling your home in south London, it's important to get professional advice from an estate agent who can help you price your property realistically and market it effectively and above all PRICE IT RIGHT! A new report from Zoopla has found that sellers are accepting bigger discounts on their asking prices in order to achieve a sale.

DISCOUNTS!

The report found that 42% of sellers have accepted discounts of 5% or more, while another 15% have accepted discounts of over 10%. This is the highest level of discounts since 2018.

The report also found that the average discount to asking price has increased to 3.8%. This is up from 3.4% in the previous quarter.

The increase in discounts is being driven by a number of factors, including rising mortgage rates and a slowdown in demand. Mortgage rates have been rising steadily in recent months, making it more expensive for buyers to borrow money. This has reduced the amount of money that buyers have available to spend on a home, and has led to more sellers being forced to lower their asking prices.

The slowdown in demand is also contributing to the increase in discounts. The number of buyers in the market has fallen by 14% in the past year. This is due to a number of factors, including the cost of living crisis and the uncertainty surrounding the UK economy.

The increase in discounts is good news for buyers, but it is bad news for sellers. Sellers who are hoping to get a high price for their home may need to be prepared to wait longer for a buyer, or to accept a lower offer.

However, the report also found that those buyers who are still in the market are committed to moving home. Sales agreed are running 8% above the five-year average, suggesting that there is still demand for homes, even in a slowing market.

Overall, the report suggests that the UK housing market is in a state of flux. Rising mortgage rates and a slowdown in demand are putting downward pressure on prices, but there is still demand for homes from those who are able and willing to buy.

If you are looking for an agent with pro-active marketing and 20 years of industry experience to get you the best result look no further! Drop me a line and let's get the ball rolling. Drop me a follow on instagram also to see the latest videos. Have you used my online valuation tool yet? Give it a go!

South London Homeowners Struggling with Mortgage Payments

I only wrote about the disastrous consequences of the 100% mortgage a short while ago, and my predictions are already materialising!

Various news outlets are reporting that broker searches are including second charges a lot more and that people are looking to borrow their way out of financial trouble. Other searches that dominated the charts included "1 year self-employed and there was a rise in searches for lenders who will accept people that are currently on a debt management plan. This as well as the number one search - ‘maximum LTV’ indicates that borrowers are actively reaching out to brokers to help them get their money worries on track by (perhaps counterintuitive to some) borrowing more. My gander is however that refinancing at a lower rate at the same time would lower monthly payments as well as free up some capital to afford themselves some breathing space.

What does this tell us?

The hangover from the sniffle that was the pandemic is now seriously kicking in. Those that took out a nice (sub 2%) fixed term loan in 2018 or 2019 will see payments sky rocketing to 6% or thereabouts! A worrying sign for sure because together with inflation having run wild for the past few years of tomfoolery on the political/economic front I can't see a lot of borrowers will have been swimming in newly found wealth - perhaps just a Porsche they purchased from the bounceback loans).

Here are the top five searches performed by brokers on Knowledge Bank during May 2023:

Impact

A recent report by Pepper Advantage, a global credit intelligence company, highlights a concerning trend in the UK residential mortgage market. Pepper Advantage (With over $60 billion in assets under management)  has identified an 11 percent increase in borrower arrears in the year leading up to April 2023. This surge in arrears, which predates the recent base rate rises, is the highest growth rate since the global financial crisis over a decade ago. What impact does that have on the South London Property Market?

Growing Mortgage Arrears

The data indicates a strong correlation between rising borrower arrears and repayment collection failures, known as Direct Debit Rejections (DDRs). DDRs occur when there are insufficient funds in a borrower's account to cover a direct debit instruction processed by a creditor. Historically, DDRs have been a reliable leading indicator of borrower stress.The year leading up to April 2023 witnessed a significant increase of 33 percent in the percentage of accounts with a DDR across its UK mortgage portfolio. This rise in DDRs suggests that more borrowers are experiencing financial difficulties, which may eventually lead to arrears.

Regional Variations and Impact on South London:

Pepper Advantage's data also reveals interesting regional variations in mortgage arrears rates. While the arrears rate in London was around five percent in April 2023, the North East and North West regions of the UK experienced significantly higher rates, approximately 10 percent each. This emerging north-south divide indicates that South London might be relatively insulated from the brunt of the arrears issue. However, it is crucial to monitor the situation closely, as economic challenges and financial stress can have ripple effects. Potential factors such as job market fluctuations, changes in interest rates, and local economic conditions could still influence the property market in South London.

Different mortgages, different strokes

Pepper Advantage's report highlights variations in arrears rates based on mortgage types. Fixed rate mortgages experienced a 35.7 percent increase in arrears, while variable rate mortgages saw a slightly lower but still significant rise of 25.1 percent. Although the growth in variable rate arrears was recorded off a higher base, it indicates potential vulnerability among borrowers with adjustable interest rates.

The South London property market could experience some impact from these variations. Landlords with properties tied to variable rate mortgages might face increased risks as a result of borrower arrears. On the other hand, those with fixed rate mortgages may have more stability, but the overall market sentiment could be affected if the arrears situation worsens.

I know from data that the rental market is shrinking by 66 properties every single day at the moment as landlords struggle to make sense of the myriad of complexities (regulations) and see no profit due to tax grabs. I do wonder which investment is taking their fancy at the moment if property isn't? Perhaps a good time to be a South London landlord as demand is increasing as well as supply shrinking! Rental prices are on the rise, that is for sure.

If you are keen for an online valuation for sales or rental check out my online valuation tool or send me an email and let's book an in-person visit.

The future is (less) bright and more energy efficient

Laughable

I never thought I'd say this, having been in property in South London for 20 years - home buyers are now curious as to the energy efficiency of their new home! What was once laughable (Energy Performance Certificates) is now a serious talking point on viewings.

I always used the "how much are the bills?" question as a qualifier on viewings thinking "you really shouldn't be asking that question, it's not going to be significantly different to the place you're in now, surely." However times change! electricity is now 50p/kwh or thereabouts if you're on a good deal, probably 10fold what they were when these energy labels became a (small and insignificant at the time) thing.

Reals before feels

In fact research is suggesting that the energy efficiency is forming a greater part of the buying decision in place of the "feel" and "attraction" of a new home. Who'd have thought?? Certainly not me. Possibly this is an indicator that buyers are stretched beyond belief when budgeting for their mortgage payments and the like... Bad news, but that's a topic for another day. 

The designer sofa is making way for the EV charging point (much to Elon's jubilance I'm sure). Research from Hive (you know, the thermostats) suggests that the top selling points for a British home are solar panels (68% voted number 1) and good roof insulation (67%) valued more than design features such as natural lighting (53%), wooden flooring (22%) and reclaimed woodwork (21%). CRAZY! But true... Leads me to think their pool of respondents needs increasing, but there we are.

EVs for the masses

Despite the electric vehicle craze only 4.5% of British homes own one! Yet the research showed that 39% of respondents would be amenable to a charging point (if they could afford it). It's one of those things that will pay itself back in your grandchildren's lifetime (by which point you would have already sold the home I'm sure). Top on the list of desirable upgrades to no surprise are solar panels, but again the cost is high. Payback period is slightly shorter mind, as the price of electricity seems to be rocketing quicker than the price of bitcoin on a good day (this is more sustained and only going one way).

Boost your property value

Respondents reported being willing to pay an average of £5000 more for an EV charger and generally £11,000 more if the home was thought to be "eco-friendly." So if you drive an EV anyway of some sort then it may be a worthwhile investment as the EV market is set to grow. The sale of combustion fuelled cars will be halted in 2030 so I trust that as we get close to that date the demand will become greater and hence the perceived value. Perhaps your home will become easier to sell over time because of delays installing all these charging points, so for once it is better to get in early. Who knows, I don't have a crystal ball. What I do know is that the narrative is "petrol bad, electric good," so treat your property value with this in mind because sentiment is only going one way.

If you are looking for a valuation on your property, EV charging point or not, then head on over here for a 60 second valuation of your property. Want a visit with more insight? Book a valuation by sending me an email!

ULEZ Tax grab sees property prices plummet

Makes sense doesn't it? Taxes go up in a particular area and demand goes down - after all the running cost of living somewhere has just risen for no good. I haven't personally noticed the air quality in Central(ish) London improving, so let's just call it what it is, a tax grab. I have read recently that the ULEZ pilot scheme which covered the Congestion Zone actually did not materially affect house prices.

Shock Horror

Well, I'm not totally surprised. I'm thinking that people within the Congestion Zone are likely to be affluent individuals who more than likely own a newer compliant car anyway, or don't even have a car. So if your income is 7 figures upgrading your car to something slightly newer or whatever is hardly going to break the bank.

What about outer London?

The ULEZ is expanding, as far as zone 6 even. Now here things change dramatically. We haven't got the tube or train infrastructure and people certainly are less well off than those living in penthouses in Belgravia. The impact of having to change their vehicle or pay a daily charge is a greater percentage of their (disposable) income. Let's look at the stats for when it expanded to the South Circular - the impacted boroughs' house prices crept up by 5.3% in the 12 months since October 2021, falling short of the wider London statistic of 5.7%. Westminster actually dropped by 5% - Kensington and Chelsea  as well as Hammersmith and Fulham dropped 4.1% and 1.1% respectively.

Mass Exodus?

It certainly seems like the frog was boiled too vigorously and there is a mass exodus on our hands. Is it ULEZ or are there other factors at play? We can only speculate of course, but looking at it from this angle I'm seeing that the London market could be subdued for some time because of these draconian measures to get everyone in a Tesla. I'm still not convinced, but Sadiq is doing his best to make driving a combustion engine just as expensive! A win for Elon and a win for Sadiq, crafty!

Your property's value

More importantly you are interested in your property's value. To ensure that you future-proof for those that do want to "be green" (get their energy from a coal power plant instead of from a petrol pump) you can install a charging point in your home in order to facilitate such green ambitions. Sadly we are at the mercy of those we vote for, so next time you vote just remember to vote with your house price in mind!

If you are looking for more tips on how to maximise your property's value then do drop me a line and I can help you get the best out of your property. For now why not check out this video I made?

Clapham - a buyers' or a sellers' market??

It's an age old imbalance. Is the "market" in favour of the buyer or in favour of the seller? To find the answer we need to stop and think what determines the market.

What?

A market is a place where goods are offered and are purchased by "ready, willing and able" buyers. In this case your zoopdiloops and Leftmove, otherwise known as the property market. Properties are offered to x number of buyers that are looking and if the right buyer presents itself, and they see value in the proposition, they purchase at the (asking) price. Should the buyer not see value they will not buy. If the value is perceived to be good a seller can expect a number of bids.

Buyers and sellers

Is that all it boils down to? Well yes, but maybe if you zoom in it's more nuanced than that. For instance if a property requires renovation you will often need to subtract the cost of the works and then some to allow for someone to put in the time and effort to actually renovate it (time isn't free, you know!) and in the case of a developer some more margin for finance costs and stamp duty and so on (again, they do this for a living, certainly not for free).

So if there are MORE properties coming to the market this increases supply. Prices will therefore "soften" or come down if there are the same number of buyers looking for a property in this market. You can see by my clever graph that Clapham has been fairly balanced for a while now, with just under half (35%ish) properties marked under offer. Should the market be busier the number of properties available dries up and you have the same number of buyers chasing fewer properties.

But what about times ahead? Mortgage rates are high - will they go higher? Remember the average property price in Clapham is considerably higher than the rest of the UK, so an increase in interest rates will certainly have an impact on affordability. I have found in my experience that buyers borrow the maximum they can and if they are searching for property soon or even now they might have a little bit less to spend on the purchase because they simply can't afford the higher repayments!

Property prices will plummet?

If we indeed see rates rise and affordability reduce then a correction will be in order. The property prices will see a small drop. I wouldn't say any property in London will plummet per se. In fact I foresee that demand will stay rather strong. It's more than likely that the trend of the past decade - the Bank of Mum and Dad - will simply step in and offer larger deposits for their offspring to keep mortgage payments in check. After all they are sitting on a lot of equity that is not being utilised per se. What will really happen? Time will tell; but for now I will continue to be selling property in South London, duty calls!

If you are looking to sell or let your property in South London then by all means get in touch for a valuation by email or check out my nifty online appraisal tool if you just wanted a rough idea on value!

I don't want to buy a property

Nope

I haven't bought a new property since 2018. I enjoyed the cashflow from my investments extensively for a few years (well, let's just say up to the point a global sniffle shut the world down). Out of all the investments I've made over the years I must say that property has, and continues to serve me well. The actual ownership of property not so - hear me out.

I don't like paying for repairs.

On my rental properties I see it as a cost of business. It's a simple equation. Rent comes in, costs go out, I reinvest the profits - be it at the local bookies or otherwise. But living in my own property - I don't like being unable to move. I don't like being tied down. And that is exactly why I wouldn't buy a property to live in, unless I'm dead set on staying somewhere for at least 10 years; because that is roughly the amount of time you'll need these days to wash the costs involved with moving. Banks, conveyancers, estate agents - everyone gets paid before you do, so any equity you may have created dwindles away quite quickly if you need to sell up before 5-10 years have past. Of course this depends on a lot of factors, but over the past 5 years I've seen zero growth in my rental properties for example - a zero sum game. In fact I've just agreed a sale at exactly the level I refinanced one out at in 2018. Surprised? Well, we have had a pandemic and a mass exodus from London over that time, and my properties aren't exactly first time buyer flats (I trust that had I purchased smaller units they would prove more popular) which would have seen a bit higher demand. The 5 yearly rigmarole of refinancing really gets my goat as well. Other countries in Europe or even the USA offer 25-35 year fixed terms, negating the need for income reassessment, changes in rates, unnecessary red tape to create industries, the list goes on.

Long term

We've just had half a decade of turmoil in the property market. So if you're a first time buyer just think long and hard what you'd do if you had to move tomorrow for your job etc. What would you do with this shiny new flat? Sell it? At a loss? Let it? probably at a loss. Rent it out? Hmmm, not really because you need the rent to be 145% of the gross rental amount. Unlikely this will be attained if you've taken out a 65% or higher loan to value mortgage.

The right time?

Perhaps now is exactly the right time to buy if you're a first time buyer (investment or live-in) if capital growth is your game. Be aware that we've seen little to no capital growth over the last few years (certainly not if you're looking to break even after fees and stamp duty and so on). If a mortgage however means security for you that you won't have to move until you want to (rather than a landlord giving you notice) perhaps it is right for you. Just be aware that if flexibility is a concern, just think that the mortgage payment outgoings are not necessarily going to be less than what you pay in rent. If you are thinking of purchasing a property - for investment, to live in, whatever - and you need some advice, reach out! I've been involved in letting, selling, buying and renting property in South London for 20 years now and I'm happy to share my expertise. Find me on linkedin, instagram, or old fashioned email: jeroen@claphampropertyblog.com

The Down to South London Property Event!

 I've been holding social gatherings for a while now for those avid property investors who wanted to stay connected. With my recent comeback to estate agency I've relaunched the meetup on a bigger scale and rebranded it the Down to South London Property Meet.

Missed it? Stay tuned for details of future events if you're looking to connect with fellow property investors.

✅Experienced Property Professionals
✅New Connections
✅Friends become Business Partners
✅No up/down/cross/sideways selling
✅Pitch Free, BS free, speech free!
✅Iconic Venue - Battersea Power Station

Feel free to reach out via social media (linkedin or instagram @downtosouthlondon for more details.

The return of 100% mortgages - a sign for trouble ahead?

The past

Do humans ever learn from experience? If you remember back in 2008 we had a catastrophic collapse of the property market and guess who suffered - yes, exactly - those that were highly geared and were stuck in negative equity situations. They became mortgage prisoners, unable to move. This simply because prices dropped suddenly and if they were unlucky enough to become unemployed overnight they'd be unable to move somewhere cheaper and sell their property if it all became too much.

A frequent occurrence

It would seem that this isn't putting off Joe Public from wanting to get on the housing ladder. After all, there's no end of free money to make that happen, what with help to buy loans and free stamp duty and all the rest of it. This, in combination with landlords being persecuted by the taxman and regulations up to here (points to forehead level) a mass selloff in combination with some free money is the perfect recipe to get more renters on to the property ladder. That's what they want, right?

But then what?

I see this all the time. First time buyers stretch budgets, borrow from mum, dad, HTB, various other means and then move in to a pukka pad in an amazing location. Then life happens. They want to live with their significant other, or perhaps if they have already bought together they want a dog/balcony/spare room/change of area. OK let's sell it and buy another one" you would think. Well here comes the problem. Most of the time first time buyers are tempted by the shiny newness and incentives of new build apartments. These are much the same as brand new cars when you drive them off the forecourt. You guessed it... even if they were to sell it 2 years later for exactly the same money you now have to factor in estate agency fees to sell, stamp duty to buy a new place and NO incentives whatsoever. Property number 2 becomes a LOT harder to move to financially speaking, unless you have received a somewhat handsome pay rise and can afford to borrow more or you've had some other cash lump sum windfall. So they can't sell, "no problem, we'll rent it out" they say. Nope. You will be unlikely to cover the mortgage repayments with the rent, maybe just, but you'd only get a consent to let. Eventually you'd have to switch over to a full on buy-to-let mortgage if you're not living there. And they are normally 75-80% loan to value maximum, with another fly in the ointment, the rent must be 145% of the interest only mortgage payment. VERY unlikely to happen given the high gearing!

The end

So in summary they're stuck. It's a quick fix to get young people on the housing ladder, but I think they will find that when life changes - and it does when you're young - you need to be flexible. And once you add up all the costs (solicitors, agency, stamp duty, valuations, list goes on) you're not (much) worse off renting. Besides, there's a lot of small print with these mortgages. You can't just have rented a room and proved a good track record, you have to have rented the whole property and been responsible for all the bills. Careful consideration should be made to commit to a mortgage - especially in a day and age where people of first time buying age can't even commit to a date. That said it's a great time to sell your property as so many people are keen to buy. If you are looking to make a move and venture to pastures new I'd love to hear about it. If you are after a free market appraisal with a view to marketing your property for sale or let I'd only be too happy to come and have a look at it. Email me at jeroen@claphampropertyblog.com or pop your property details in my online valuation tool!