…so the market has changed some, but how has it changed exactly? In this article I am going to compare the prices from 12 months ago to now. And straight comparison is not an easy task, so keep a close eye on the details.
Let’s commence by setting some baselines. In order for the comparison to make sense, I need to compare apples to apples – or a property listed for sale now with a similar one, just sold approximately 12 months ago.
As a Londoner I am partial to Victorian architecture, so let’s set our first property type at a 3 bedroom semi*. We are going to place this semi in a specific neighbourhood – Kensal Green.
Next, we are going to lean into Monika from 5 years ago and we’ll look at 1 bedroom leasehold** flat in Shoreditch.
And finally, we’ll look at a 2 bedroom period conversion*** in Streatham Hill.
3 bedroom Victorian semi-detached house in Kensal Green
Kensal Green is a moderately diverse neighbourhood in North London, TFL zone 2. It’s mainly residential, reasonably clean and safe. A 3 bedroom Victorian semi-detached, terraced or end of terrace house will set you back anywhere between £0.8m and £2.2m.
The street we are going to look at in particular is Hiley Road, which currently offers a gem of a property, listed at £1,15m. Feel free to take a look and marvel at the property costs in London here. Of course this property is a beautiful one. It’s not too distant neighbour, in a slightly worse state sold 11 months ago for £870k. You can see it here.
The houses in this particular neighbourhood have approximately doubled in value in a space of a decade, and it appears that the last 6 weeks have not bucked the trend in any significant way.
1 bedroom leasehold in Shoreditch
Shoreditch and Old Street are an abundant ground for 1 bedroom leasehold flats. We are going to focus on the ever-popular new builds and modern warehouse conversions. If you are a highly skilled and possibly a little pretentious hipster, this is where you want to be.
The task of establishing an average price is challenging here – you can find properties from £400k ranging to in excess of £1m, depending on where you look. I am going to look at Hackney Road, EC2. One of the popular new developments there is the HKR which currently has a lovely 1 bedroom flat listed at £685k. But it’s so new that there are no direct comparables. If I were to look at neighbouring developments, the approximate price appraisal over the last 12 months in accordance to Zoopla is 11.22%. This does however include all types of property. If we narrow the search down to flats, the statistics indicate 11.58%. It seems that we’re not quite in recession yet.
To give you another somewhat extreme example seemingly opposing the trend of price increases, we are going to look at Lion Mills, a modern warehouse conversion, which includes one sold flat from last year, at £385k. It is worth pointing out that in the same development another 1 bedroom sold for £395k in 2015. This does seem to represent the trend in anything new-ish – although the luxury flats hold their value over the years, the more unusual properties don’t appraise in the same way as traditional homes do.
Lastly, a conversion flat in Streatham Hill.
Streatham Hill is an idyllic young family hotspot with a strong sense of community. I love Streatham Hill and if I weren’t unceremoniously priced out, I’d still be living there now. Saltiness aside, here is the detail of what we are going to look at.
It is a common practice to divide large properties out into multi-family units in London, and throughout the UK. It is normal to see a nice, large townhouse of any architecture with an entryphone indicating that there is a different family on every floor. The property I am starting with that type of unit – in a converted house, a leasehold and a 2 bedroom. The street we are perusing is Salford Road. The funny thing about this street is that it’s in Streatham Hill, but it’s also in Tooting Bec and Balham. Neighbourhoods are sometimes fluid in London and can overlap a little.
The flat in Salford Road is listed at £475k. A similar one, alas 18sq m larger sold for £587.5k in October. One a little closer in size sold in December 2017 at £500k. This means two things. Firstly, the property prices for this type of accommodation in this neighbourhood are stable and are not really dropping. BUT this also means, that they are not appraising fast enough to keep up with the price increase of the houses mentioned in our first case.
When the recession hit the UK property market in 2008, the prices dropped as much as 40% for the most expensive units available. If we give this current state of affairs a couple more months, could the same happen? The simple answer is that nobody really knows. The property prices have indeed dropped in 2008-2009, but two year later they surpassed the original peak and just kept going up.
So far, the prices have not changed but the stock availability has – there have been hardly any new properties listed on the market and hardly any taken off the market as sold STC****. Similar to the immediate fallout of the last recession, buyers AND sellers are simply sitting on their hands.
*semi – a semi-detached house is a house where one wall (usually called party wall) joins it with the neighbouring property.
**in UK we differentiate between leasehold and freehold property. Freehold refers to owning the property outright. Leasehold refers to leasing the property from a freeholder for extended period of time such as 999, 125 or 99 years. Leasehold carries annual ground rent and service charge fees.
***period conversion is used to describe a period property such as Victorian, Georgian or other which has been divided into multiple units.
****sold Subject To Contract. When a seller accepts an offer on a property, the agent is obliged to update the status on publicly available marketing materials to reflect this. It is also common for the property to be de-listed and closed to viewings for any interested buyers while the contracts are being prepared.
Main sources of research:
rightmove.co.uk (for currentl proeprty listings and past sale prices), zoopla.co.uk (for past sale prices and neighbourhood statistics), various independent estate agent websites, hkr-hoxton.co.uk, primelocation.com