West End residential; Our patch, Our view Q1 2016
The wider London market remained robust throughout the first quarter of 2016, with Nationwide reporting annual price growth of 11.5%. This is broadly on a par with the average growth rates seen throughout 2015.
Transactions across the capital fell by around 13% in 2015, to around 110,000 sales. However, there were also 26,900 new build units sold; up 19% from 2014. The market is suffering from a lack of stock for sale with RICS reporting the average stock of homes per estate agent as about half of the long-term average. As from April 2016, buy-to-let investors are subject to an additional 3% stamp duty on purchases and, as a result, we expect some volatility in sales in the first part of the year. However, any transitory impact is likely to be ironed out by the end of the year.
On the macro side, the economic fundamentals in the UK look strong and set to continue. This is helping to underpin the housing market. In particular, the labour market continues to perform well, recording the highest employment rate since records began 45 years ago. Inflation has remained close to zero for well over a year, and is likely to remain at this level in the very near term. This will ensure the low interest rate environment is maintained, creating further certainty and stability in the mortgage market which will undoubtedly bolster the London housing market.
Reflecting these factors in the West End both the sales and lettings teams saw a strong and steady first quarter. The sales team agreed £44.2 million worth of property, with units averaging values of £1,680 psf – 3% higher than the same time last year. This strength was echoed through lettings, which agreed £57,258 per week worth of tenancies, 15% higher than the same time in 2015. In addition, current rents in our patch sit at £855 per week, a figure that is 28% higher than last quarter and 21% higher than the same time in 2015.
We hope you enjoy the latest edition of Our Patch, Our View. If you would like any further information please do not hesitate to contact a member of the team, whose details can be found at the back of this report.