The London property stock shortage

Why is there a property stock shortage in London? What impact has the hot summer had on the stock shortage? Are there any other factors in play? Deborah Battsek PR asked property experts from Aylesford International, Lurot Brand and Pastor Real Estate.

Brendan Roberts of Aylesford International: “There is a real shortage of stock and whilst stats might show an increase of circa 15% on availability in the past 12 months, this follows several years of declining stock numbers. At the same time the stats for sales transactions show a reduction of 16.2% over the past year, which correlates with the 15.5% increase in available stock – as it hasn’t sold and is still available! In Central London there were 377 new instructions over the past week, with 277 properties withdrawn – this reflects that owners are withdrawing if they don’t feel confident that they will achieve what they are aspiring to. There were 134 sales, so overall the available stock has reduced by 30 properties in the past week from what was already low availability.

Marlon Lloyd Malcolm of Lurot Brand: “I don’t think the answer to this question is that straightforward. We sell properties between ￡1m to ￡10m and have found that buyers with a genuine ‘need’ to purchase have a wide selection to look at, however, due to a lack of confidence in the market they are not prepared to compromise on their wish list. For this type of buyer there is a shortage of ‘quality’ stock made up of properties finished to a high standard. On the flip side, there are those buyers looking to take advantage of the market’s uncertainty and for this type of buyer, typically interested in properties that are priced 30-35% below the 2014 peak, there is a shortage of ‘well-priced’ stock. Ultimately it is less about a stock shortage and actually about a lack of confidence linked to excessive transaction taxes and political uncertainty.”

David Lee of Pastor Real Estate: “Following many years of extreme stock shortages in Mayfair, availability has started to increase, but there is still not enough.”

Is there a stock shortage of any particular sort of property?

DL: “Yes, there is a distinct lack of smaller studio and 1 bedroom apartments available to purchase in Mayfair. These properties remain in high demand, especially those that benefit from a lift or outside terracing. Many purchasers seek out these type of properties as investments or pied-à-terre’s. They are by far the most liquid assets in the area and remain highly prized.”

Why is there a stock shortage?

BR: “Lack of confidence in the market from both sellers and buyers; sellers will usually be buying elsewhere either bigger or smaller and have the sales costs plus SDLT so unless they feel confident that they can achieve what the y want to justify the move they will stay put. Low interest rates means that servicing mortgages is comfortable, so why move? Buyers are uncertain of how the market is likely to perform, lots of negatives with rates slowly starting to rise, real economic data and Brexit uncertainty, so buyers are looking for value to be persuaded to commit. The result is a wide divide between the aspiration of a seller and the value seen by the buyer and very difficult to bring the two sides together.”

DL: “Your typical Mayfair vendor is likely to remain a reluctant seller for the foreseeable future. Unless there is a strong reason to sell, the vast majority of homeowners prefer to retain their properties, looking to realise the area’s long term capital growth.”

What impact has the weather had on stock shortages?

BR: Everyone seems to want outside space! Homes tend to look their best on a warm sunny day. Perception is that August is a very quiet month so we are unlikely to see much new stock until September.

DL: Historically, Mayfair is always quieter in the summer months due to large swathes of buyers heading abroad for their holidays. This trend remains the case this year. Despite the hot weather, many have opted to leave for even warmer climates. Equally, there are a large number of overseas buyers who have recently arrived in Mayfair for their holidays, ensuring there are still plenty of viewings being carried out.

What impact do you think the heatwave had on buyers’ behaviour?

BR: “I don’t think the weather has had too much impact, although I sense that many buyers (and sellers) have spent their evenings enjoying summer drinks rather than viewing or showing houses, but the distractions of the World Cup, and the myriad of sporting and social events that London offers have been a distraction with the outstanding weather this year.”

MLM: “Certainly, we have seen a huge drop in viewings from buyers. During the heatwave, more appointments are being cancelled. That being said, we have found that those who do commit are more serious and therefore, our ratios of viewing to accepted offers has also risen during this period. Aircon has never been a better home improvement. From a sales point of view it has the same effect as heating your home in the winter to make the property welcoming. There is never a simpler way of making a buyer fall in love with a house than to make them feel at home and relaxed as soon as they walk through the door, a calm cool environment can feel like a sanctuary away from the heat of the city.”

DL: “We continue to see a steady flow of applicants registering to buy with many braving the hot temperatures. From an agent’s perspective, properties with air conditioning have certainly been more enjoyable to view than those without!”