- The to-be-expected pre-election drop on property prices of 0.1% (£242), which was the first fall in May since the last general election in 2010 and a notable contrast to May 2014’s +2.1% increase, has now bounced back.
- The majority government means that it’s very much ‘business as usual’ in the financial sector, which bleeds through to the property market and effectively takes the brakes off for both buyers and sellers.
- New seller numbers jumped 17% after the 2010 general election. Agents in Canary Wharf and other Prime property locations across the capital now anticipate a similar situation. Coupled with an increase in new stock, this could be an effective boost to what has been a very soft market.
- Because property prices have been relatively flat over the past couple of years, buyer affordability has now improved, thanks to the lowest annual increase for over two years, down to just +2.5%
- Finally, the removal of the threat of a ‘mansion tax’ on properties over £2million could act as a huge stimulator for the Prime market sector in particular.
Canary Wharf – the key Prime location in East London
The rise and rise of Canary Wharf has seen it perform astonishingly well in the Prime indicators year on year. But as this relatively small area becomes increasingly densely packed with occupied rental and leasehold/freehold properties, we are starting to see a bleed-through effect into E16 and Shoreditch in particular. Existing developments are in huge demand, particularly for overseas clients who are enthusiastic about the location, facilities and the proximity to the new financial hub of the Wharf itself.
East of Canary Wharf, which was once regarded as a less desirable location, is now increasingly popular as prime developments bring serious investment into the area. Not only have the number of developments increased, but demand has matched supply and, in some cases, is outstripping it by a considerable margin.
Long-term market growth in E16
These are not ‘flash in the pan’ numbers, but indications of a potential long-term morphing of the E16 area into an extension of the Canary Wharf Prime market. Thanks to a number of developments due for completion in the coming years, interest and consequently demand for prime property in E16 will continue for several years at least.
Again, much of the capital for these developments has been brought to the table by overseas developers, who are keen to establish themselves as both investors and end users. Indeed, even second-hand stock in Canary Wharf is buoyant and in some instances being snapped up as soon as it comes on the market, often by those same investors.
Less room for negotiation
However, there is one factor that both buyers and sellers may need to take into consideration. Because of the rising demand for prime property in Canary Wharf, property in E14 and now developments and property in E16, the chances of negotiating on asking prices are limited, as they are now more determined by demand than supply. So it is very definitely a ‘seller’s market’ right now.
Average ‘Time to Sell’ days has dropped in London to 54, indicating a more dynamic market. Areas such as Canning Town, Silvertown, Custom House and the Victoria Docks area are still running a little behind on other more established Prime areas, but this part of Newham (which is currently showing a –3.1% monthly change in prices) has the advantage of plenty of waterfront properties and developments, which will quickly drive interest – and subsequently prices – up. In fact, it could easily be seen as ‘desirable’ as Canary Wharf was five years ago.
In conclusion, E16 is the location to watch over the next few months for investors and buyers. But expect prices to rise quickly, as demand starts to outstrip supply, and that there will be less room for negotiation on asking prices.