Black Brick market report: April 2024
Maybe it is the longer, lighter evenings, or the sight of magnolia trees bursting into bloom, but there is a sense of springtime optimism in the air. And with the UK economy on course to exit the recession of late 2023, with GDP up 0.2% in January, and inflation down to 3.4 per cent, there are many reasons to be cheerful.
London, first amongst equals:
London remains Europe’s super prime property capital in the post-Brexit world according to new research from estate agent Knight Frank. Some 52 homes worth $10m or more were sold during the final quarter of last year, found the firm, level pegging with New York, and beaten only by Dubai.
Across the year, and despite the mini-budget fiasco which gave markets a nasty jolt, 240 superprime homes were sold in the British capital, comfortably beating New York’s 201 deals. During the same period Geneva managed 112 sales, and Paris just 25.
Part of the reason for London’s appeal to ultra high net worth buyers is lifestyle. “We have the best education, the rule of law which should not be underestimated, we are in a brilliant time zone,” said Camilla Dell, managing partner of Black Brick. “People come to London because it is a great place to work and to bring up a family.”
The other factor is that wealthy buyers are well attuned to the fluctuations of global property markets and have spotted that a window of opportunity may be about to close.
“This kind of buyer is sophisticated, and tends to be well advised,” said Dell. “I think they realise that this is as good as it gets in terms of the bottoming out of the market. And London is looking relatively good value at the moment, without the kind of crazy double-digit growth you have been seeing in Dubai, which feels very frothy and high risk.”
A fairer deal for leaseholders?
International buyers tend to react with a mixture of horror and disbelief to Britain’s unusual property system, where around 20 per cent of homes are bought and sold on a leasehold basis.
Put simply this means buyers don’t own their properties in the conventional sense. Instead, they lease them for a set number of years, usually paying a regular annual ground rent to the freeholder, and having to engage in a complex – and expensive – legal process to extend the length of their lease. Homes with short leases, usually defined as less than 80 years, can be very hard to sell because of the complication of renewing them.
Happily, both the main political parties have leaseholds in their sights.
The Labour Party has vowed to abolish leasehold in the first 100 days of government if it wins the next general election; precise details of how this will be done remain to be seen.
Meanwhile the Conservative Government’s Leasehold and Freehold Reform Bill aims to curtail ground rents, which go up during the length of the lease, sometimes to unaffordable levels. It should also make it cheaper and easier to extend leases and for leaseholders to buy their freehold and take over management of their building. MPs approved the Bill at third reading in March, and it will now be considered further by the House of Lords.
“I think this is all very positive news,” said Dell. “Buyers, especially from overseas, find it very hard to get their heads around the system, so simplifying it, or getting rid of it, will help with confidence. We have certainly had deals fail because of problems with escalating ground rents.”
The key beneficiaries of changes to the leasehold system will be owners of short lease properties, because it will reduce the headache of extending a lease and make their properties more appealing to a much wider audience if they want to sell.
At present mortgage lenders will not help fund the purchase of short lease properties. If new regulations make them rethink this stance then, said Dell, these currently-blighted properties could represent new opportunities for buyers.
Can Earl’s Court earn a place in prime central London?
Mention Earl’s Court to a Londoner and you will likely get a rant about the appalling traffic on the A3220 which dissects the west London neighbourhood, or jokes about Kangaroo Valley, the nickname given to the area after it was colonised by Australian backpackers in the 1960s.
But SW5 has much to recommend it. An amazing Zone 1 location south of Kensington, and some wonderful Victorian and Edwardian architecture.
And the Earl’s Court Development Company has just unveiled the first details of its £8.5bn plans to redevelop the 23-acre site of the former Earl’s Court Exhibition Centre. A planning application will be lodged this summer, with work starting in 2026.
The plans include 1,000 zero-carbon homes, some within a landmark 42-storey tower, plus a park, a cultural venue, student accommodation, and a workspace hub.
Major regeneration projects like this have a habit of smashing local ceiling prices, causing a ripple of price growth in surrounding areas, making Earl’s Court a compelling option for buyers looking for capital growth.
But, said Dell, the devil is in the detail.
The success of Earl’s Court will depend on the quality of its public realm and the curation of the shops, restaurants, and bars which will open within it. “The lovely thing about the regeneration of King’s Cross, which has been a massive success, is that it has real focal points at Granary Square and Coal Drops Yard, with amazing pedestrian areas and really cool and trendy shopping and restaurants,” said Dell. “The success of an area is more than just spending billions on fancy flats.”
That sinking feeling:
While superprime sales in London are strong, in the slightly lower echelons of the market prices are continuing to fall in central London postcodes according to a series of new studies.
Knight Frank reports an “uncertain” start to 2024 with prices in prime central London down 2.4% in February and a slip of 1.6 per cent in prime outer London (POL). Demand, however, looks strong with a nine per cent increase in the number of new prospective buyers compared to the five-year average for February.
House price analyst LonRes, meanwhile, finds that prime central sale prices have dropped 7.8 per cent in the year to February, bringing prices down to early 2014 levels. Transaction numbers are down 2.7 per cent per cent year on year. Nick Gregori, head of research at LonRes, said that while agents are busy there seems to be “slow progress from offer to exchange” which is keeping deal numbers down.
There does, however, seem to be growing confidence in the mainstream market as interest rates creep down. The latest UK House Price Index found that sale prices dropped 3.9 per cent in the year to January, but rose 2.5 per cent over the past month.
Black Brick news
New horizons:
After almost two decades helping people buy their perfect London or Home Counties home Black Brick is expanding to the West Country.
The first tranche of its new Country & Coast Department will be led by Anna Sharp, formerly of Savills, representing her home county of Cornwall, and Rupert Stephenson, who lives near Dartmoor and has 20 years’ experience running his own agency. He will cover Devon, Dorset, and Somerset.
The expansion comes at a fascinating time for these markets, which burned red hot during the pandemic, with competitive bidding the norm as urban buyers raced to relocate from cities, or hunted for a perfect holiday bolthole.
That bubble has now firmly burst.
According to the latest Land Registry figures, properties in the TQ8 postcode – which covers fashionable Salcombe in Devon, locally known as Chelsea-on-Sea – plunged 23.3 per cent between October 2022 and October 2023, a drop of just over £210,000.
This calmer, quieter market represents a great opportunity for buyers who don’t want to end up overpaying for a property in an overheated market.
“Now is a fantastic time to buy in the south west,” said Sharp. “Prime coastal areas have seen a price adjustment, which was arguably needed, and there are not the same levels of pent up demand that we saw during the pandemic. Back then we would be up against 20 sealed bids – now it might be two or three.”
A complicating factor for buyers keen on picking up some west country real estate is that many of the best properties are sold before they ever reach the open market.
“A lot of vendors would much rather sell off market, rather than being seen chasing the market down and dropping prices,” said Sharp. “We have a high number of off-market properties up our sleeves to offer buyers.”
Managing Partner Camilla Dell said: “As the world continues to get hotter with global warming, summers in Europe are becoming unbearable for many, and we believe staycations will become more appealing for those wanting a holiday without the extreme heat. Cornwall and Devon are areas of outstanding natural beauty and offer buyers the perfect blend of stunning natural landscapes, rich cultural heritage, an amazing food scene and a relaxed coastal lifestyle. Anna and Rupert are highly experienced and talented buying agents and I have no doubt will make a huge success of their roles as Regional Directors for Black Brick West Country.”
Black Brick will be rolling out into other parts of the UK over the next 12 months, focussing on locations where demand is high, stock is scarce, off market sales are commonplace, and buyers of main and holiday homes most need assistance.
Acquisition of the month:
Ormonde Court, St John’s Wood.
£2.075m.
This deal was a real family affair for Black Brick.
Our first time buyer client came to us because we had helped her parents buy their home almost 20 years ago.
She wanted a two bedroom, two bathroom property close to the family property, which is in one of north London’s most desirable locations.
After an extensive search we found her a much larger property than she had initially requested, and one with tremendous potential. The five bedroom house is on a quiet street right beside Primrose Hill and its size means that it will be a great long-term investment.
We negotiated hard on her behalf, succeeding in shaving 15 per cent off its original asking price.
At just over £2m our client ended up paying less than £1,000 per square foot for the 2,238 sq ft house.
Top flight:
Black Brick has been named as one of the UK’s best buying agents in the prestigious 2024 Spears Property Indices, which features the top property professionals in the country.
Camilla Dell is named as a “top flight” buying agent for her long track record buying properties for domestic and international clients, and her “professional, energetic, and tenacious” approach and expert negotiation skills.
Her colleague, newly promoted Partner at Black Brick Tom Kain, is ranked as “top recommended” by Spears, which praised his ability to source off market property and back up his advice with clear, transparent data and evidence.
Both he and Dell provide a wraparound service, helping clients find the right lawyers, financial advisors, surveyors, architects, and interior designers to bring their property dreams to life.
