Prospects for the property market in London over the next 12 months and beyond have received a shot in the arm from an unlikely source.
Small-scale mortgage provider OneSavings Bank, a business that was only established in 2011, has launched a finance package aimed at secondary investors in property developments.
As an independent Belgravia estate agent that is committed to achieving the best price for your central London property – and has a proud record of selling homes for values higher than previously seen in a long list of prime central London streets – Best Gapp could never recommend one finance product over another.
But the significance of this new product being offered in conjunction with mortgage broker John Charcol is that it shows the buy-to-flip market is back to a level of strength last seen before the financial crisis of 2008.
In those heady days – when it was not unheard of for a City worker to take a taxi from one end of the office to the other and claim the fare on expenses – investors who bought into off-plan developments would often sell on their holding to a secondary investor before the scheme was complete in order to cash in on any gain in value made.
And the secondary investors were still able to profit because the plot in question was continuing to rise in value.
Best Gapp is more than aware that the number of new-build developments being sold off-plan is extremely limited in Knightsbridge, Chelsea, Mayfair, South Kensington, Westminster and other parts of the capital that we operate.
Confidence remains high
But the fact this new mortgage product is only being made available for secondary investments in London and south-east England shows the lender has confidence in the capital’s prospects for property price growth.
This confidence is shared by the Royal Institute of Chartered Surveyors, which is saying house prices in London and the south-east will continue to rise by 5% a year for the next five years.
Although this figure is not as high as the 12.4% increase in London property values that the Land Registry reported for 2015, the RICS’s outlook is still upbeat.
This is in marked contrast to the opinion of property economist Hansen Lu.
Mr Lu, who works for independent research company Capital Economics, claims the outlook for prime central London housing is “lacklustre” and “prices in the most expensive parts of the capital will struggle to do more than mark time” during 2016.
He warns that the relatively strong pound, global economic turmoil, the free-falling oil price and tax hikes for high-value homes could paralyse the top end of London’s housing market over the next 12 months.
Best Gapp is an estate and letting agent, not a property price prediction business. We are unable to see into the future.
But we are sure that all the time the Bank of England’s base rate remains at 1% or below, London experiences economic growth and demand for property in central areas of the capital outstrips its supply, homes in prime central London and beyond will hold their value at the very least and in all likelihood rise in price.
OneSavings Bank obviously thinks the same – otherwise it would not be fuelling the buy-to-flip market by offering secondary investors the opportunity to buy into off-plan developments.
Maximising property values
Best Gapp’s success is based on our in-depth knowledge of the prime central London market, which enables us to maximise the value of your property.
We are aware demand for residential property in Belgravia and the surrounding areas far outstrips supply, which is why we have a long list of buyers and tenants waiting for your property to come on the market.
For honest advice about the true rental or sales value of your central London property, contact Best Gapp today.