|Massive Surge in Average Chiswick House Price Masks Concerns|
70% increase during 2020 not reflective of true state of market
The latest official figures suggest that there has been a massive boom in Chiswick property prices during 2020 with the average price rising by over 70% but the reality is less dramatic.
The Land Registry have reported that the average price of a property sold in the W4 postcode area during the fourth quarter of 2020 was £1,311,422 a 72.2% increase compared with the same three months in the previous year.
The size of the rise is deceptive and partly due to the comparable period in 2019 when the Pocket Living development on Bollo Lane was being sold. These flats were marketed at levels typically well below the average Chiswick property price at a time of generally low activity elsewhere.
The extent of the rise has also been boosted by a continuation of the trend in which large family houses have seen robust demand whilst transactions involving flats have fallen sharply with only 17 sales being reported between October and December 2020.
Andrew Nunn of Andrew Nunn Associates says of the figures, "The low volumes recorded in the last quarter are not surprising given the majority of those transactions probably reflect sales agreed (market sentiment) between April-June 2020 when lockdown and Brexit uncertainty was at its peak and buyers were at their most cautious.
"During this period the popularity of family homes proportionally skyrocketed which reflected the eagerness of families now having to work from home and needing more space – both indoors and outdoors. Those who lived in Central London and were secure in their job role, now preferred greener areas to the west and saw value for money and opportunity to invest in long term family homes in and around London’s First Garden Suburb. The stamp duty holiday was an additional incentive as was the plethora of particularly attractive mortgage deals for those with a good level of equity.
"Conversely the number of flats sold plummeted as buy to let investors and overseas buyers stayed away from the London market during 2020 leaving first time buyers to pick up the slack. Lockdown caution, the worry about short term employment and earnings, the challenges of securing a competitive mortgage with a small deposit, and ultimately affordability led many buyers to defer their intended purchase until there is greater clarity in the short term future of the market."
Even though there were just 57 properties sold during the period, five of them went for over £3,000,000 including Red Lion House, the Grade II listed former pub next to Fuller's Brewery on Chiswick Mall which changed hands for £6,400,000.
The stamp duty holiday which is due to expire at the end of next month is leading to unusual market conditions and estate agents generally are hoping that there won't be a cliff edge in which the end of the extension results in a return to the previous levels of duty with no relief.
Julian Masson, Branch Manager at John D Wood & Co on Turnham Green Terrace said, “The end of 2020 and the start of the New Year brought fresh impetuous to the property market and despite the Prime Minister’s announcement to enter a third national lockdown on 4 January, buyers were still keen to make the most of the stamp duty holiday. For us, this was demonstrated by the fact that we agreed the sale of seven properties in January which was very encouraging. As we edge ever closer to the end of March and with the likelihood of an extension to the stamp duty holiday dwindling, many buyers have come to the realisation that they are incredibly unlikely to make the deadline and so are taking more time with their search and have lost a bit of the recent urgency.
"Due to the pandemic, the average time for purchases to progress from a sale agreed to exchange has increased dramatically mainly due to a slow-down in the mortgage process, search results received from councils and general efficiency from various parties involved. Now more than ever, it is absolutely imperative for a buyer and seller to instruct a proactive and efficient mortgage broker and solicitor, both of which we can highly recommend at John D Wood. It’s difficult to say what the future will hold for the property market but we predict a busy start to the spring with many buyers and sellers holding back for the lockdown restrictions to ease and for the improved weather and optimism.”
Christian Harper of Harper Finn is not totally convinced that the market is poised for a more broadly based recovery. He says, "Vaccination, lock-down, covid 19, Brexit fall-out, recession, essential travel only…. The 'glass half empty’ brigade have plenty to choose from and continue to have a ball! What I really can't explain is despite everything, the market is doing very well. I think I’m going to call Q1 2021 a ‘Unicorn Market’ - Doesn't really exist but seems to have some kind of mystical power of good.
"Weekly I invest many hours researching market trends whilst listening and reading views from experts that appear to have optics beyond my reach but it all leads down to how many times my phone rings. Currently it's not ringing off the hook but my home office is a hive of activity. Buyers registering for house purchases are consistent with a typical February whilst flat buyers have been very busy over the past few weeks, all trying to secure a home before the stamp duty relief expires at the end of March.
"Q4 2020 figures are an interesting read but don't really reflect the peaks and troughs that we have all experienced during the pandemic, show nothing that we weren’t expecting and nothing that we didn't discuss with the release of the Q3 Chiswick Property Quarterly Report."
He has concerns for both the future of house sales and flat sales. For the former he detects that clients currently believe that this is the wrong time to start marketing properties which is reflected in a low level of stock and there is a danger that the market could dry up completely. He believes flat sales will recover in the next quarter as transactions are rushed through to beat the deadline but further incentives are needed from the Chancellor to ensure the market doesn't tank during Spring.
Andrew Nunn is slightly more upbeat about the prospects for the market saying, "Latterly between July 2020 through to January 2021, the stamp duty holiday has added much needed momentum to the sale of flats which should now be reflected in the first quarter 2021 statistics as the length of time to complete a transaction has increased to an average of four months and buyers now rush to complete before the deadline on 31st March. We will keep a keen eye on the 3 March Budget when any extensions to the stamp duty deadline will be announced by the Chancellor.
"Looking forward activity in the first six weeks of the year has been excellent and so if you are considering a move in 2021 now may just be the right time to take valuation advice."
Roughly speaking the post code sector areas are as follows:
1 - Bedford Park and the north side of the High Road
2 - The south side of the eastern end of the High Rd down to the river at Corney Reach
3 - The Grove Park area and over to Strand on the Green
4 - The west of Chiswick between the A4 and Chiswick High Rd - (a high concentration of flats)
5 - The north west of Chiswick - Acton Green mainly
Robert Gardner, chief economist at Nationwide, said, “To a large extent, the slowdown probably reflects a tapering of demand ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase. While the stamp duty holiday is not due to expire until the end of March, activity would be expected to weaken well before that, given that the purchase process typically takes several months (note that our house price index is based on data at the mortgage approval stage).”
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