I am in London over Chinese New Year talking to agents etc about the state of the residential sector. The one recurring theme is that there is a shortage of quality properties on the market. Heavy demand from overseas, and a little surprisingly, UK buyers means that well priced properties are selling quickly. Houses in particular seem very popular, especially in prime areas such as Chelsea. The investment bankers may have had their bonuses cut, but they still seem able to house their families in the style they have become accustomed to. Newly refurbished properties are particularly popular as people don’t seem to want to go through the building phase – they want to move in straight away and will pay a premium for the privilege of doing so.
Most investors focus on apartments in zones 1 and 2, but the acute shortage of freehold houses in these areas augers well for this niche sector going forward. Of course, the investment level for a house in Chelsea deters most investors from buying one. Prices start from GBP3m and head rapidly north from there. Importantly, that doesn’t seem to deter the investment banker or overseas national who wants a prime property with a small garden and a feeling of space from buying.
Whilst a number of new apartment developments will come on the market in the next few years, they are not building freehold houses. Prices for this type of property will continue to rise over the next several years.