Aston Chase Quarterly Report - Q1 2019

At the beginning of the year we looked at both lending figures and the amount of property enquiries Aston Chase had received in January and questioned whether the market had ‘bottomed out’ in mid/late 2018, and if buyers were potentially about to return to the market in a meaningful way.

As we enter the second quarter of the year, it seems that the January assumption was correct, as Aston Chase have exchanged on over £63m worth of property since the beginning of the year, with a further circa £70m of property in the pipeline. This compares to a total of £61m in the last quarter of 2018, which included two deals exchanging on Christmas Eve amounting to £25m.

In terms of pure deal numbers it is a 45% increase (between Q4 ’18 and Q1 ’19), which reflects the fact that across price ranges, buyers are returning to the market. The average sale price in Q4 2018 was just over £6m whereas in Q1 2019 it was circa £3.5m.

Whilst historically the Spring/early Summer period (March-July) has been the most active time of the year - with Autumn a close second - this seasonal market is probably a thing of the past. Since the changes to Stamp Duty in December 2014 (and again in April 2016), in addition to the two General Elections and the Brexit Referendum in the same period, the market has been highly discretionary with people moving home less frequently and being more considered in their purchasing patterns.

In some instances we have seen a 10-20% reduction in prices over the same period and clearly despite the ongoing uncertainty regarding Brexit, buyers finally feel that the market has adjusted and some notion of value has returned. January and February are not traditionally buying months, so there must be a rational explanation for this change. To be clear, none of these transactions were either January sale bargains or Valentine’s Day gifts!

Some interesting data on nationalities of buyers;

  • 55% have been British
  • 22% were from the EU
  • The remainder (23%) from a combination of India and the Middle East

This reflects the fact that London is set to continue as the leading global wealth centre in 2019 with the world’s largest UHNWI population topping Knight Frank’s City Wealth Index. In addition to this, any buyers who have been able to benefit from the USD/GBP exchange rate have quite possibly had a once in a lifetime opportunity to buy a London home at a deeply discounted rate.

The breakdown between flats and houses was roughly 50:50 which surprised us slightly, as much of the market sentiment seems to be focused around buyers of family houses finally dipping their toes back in the water following a period of limited activity. Whilst that is clearly true, those buyers are not as dominant as we thought.

Therefore we feel that we can draw the following conclusions - prices have been through a period of adjustment and buyers are seeing greater long term value in the market. However most importantly, the ongoing political shambles is not deterring either domestic buyers nor our friends from the EU from committing their medium to long term futures to London.

Only time will tell if the market is slowly returning to some kind of normality or if these transactions simply constitute a continuation of the sporadic activity we’ve seen since the end of 2014. Hopefully it will prove to be the former and not the latter!

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