Understanding residential property in clerkenwell - Supadu

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Understanding residential property in clerkenwell - Supadu

Insight

clerkenwell

Spring 2012

Understanding residential property

in Clerkenwell

Clerkenwell

020 7405 1288

West End

020 7240 3322

Islington

020 7354 2480


Overview

The 2012 Budget has made some significant

changes to the cost of buying a home at the

very top end of the UK housing market. The

full impact on London's housing market

remains to be seen but we have provided an

overview of the key points below.

London still star performer

The first quarter of 2012 saw London's

housing market continue to be the

top performer in the UK and the

north-south divide widen further.

Average house prices remained fairly

static across the UK, increasing by

0.2% in the year to the end of March.

Meanwhile London continued to

outperform with values rising by 2.3%.

Prime London boroughs excelled

further with 6.0% and 5.6% recorded

for the boroughs of Camden and

Islington respectively.

Implications of Budget 2012

London's ability to buck the national

trend in house prices has, however,

made it the target for politicians in

the recent Budget. Various tax

measures have been implemented, or

are being consulted on, in an attempt

to close loopholes and generate extra

income from housing transactions. In

brief these are as follows

a) 7% stamp duty land tax (SDLT) for

all properties over £2 million with

immediate effect

b) 15% Sdlt for properties over £2m

owned by a 'non-natural person' (a

company or collective investment

scheme) with immediate effect. The

government has also entered into

consultation on both an annual levy

on properties owned by a non-natural

person and capital gains tax

extended to non-resident, non-natural

vendors. These could potentially be

implemented next April.

onlytimewilltellwhatthereal

impact of these changes is likely to

have on London's property market. In

our local market, based on 2011 sales,

an additional £63.7m stamp duty

would have been paid.

We anticipate that the 7% SDLT will be

felt most by households at and

around the £2 million threshold. The

additional cost that moving will now

incur may put many off. This could

further constrain supply and reduce

transaction levels in a market that

already suffers the consequences of

an imbalance between supply and

demand. However, over time we

envisage that this extra cost will be

absorbed in a similar way to the

increase seen in last year's budget.

Of potentially greater consequence is

the three-tiered attack on properties

bought by corporate vehicles as

referred to above. Many overseas

buyers purchased property in this

way, often motivated by privacy and

inheritance tax advantages and not

avoiding stamp duty. It will take a

while before the full impact can be

calculated. In the meantime we will

be monitoring the situation closely

and advising you of any updates.

Facts and figures

5.6%

increase in values in the borough of islington

average annual growth

6.0%

increase in values in the borough of camden

average annual growth

0.3%

economic growth

first quarter 2012

7%

stamp duty on homes over £2m

with immediate effect

15%

stamp duty on properties over £2m

bought via companies

with immediate effect

17%

rise in luxury car sales

second half 2011

£633,000

average asking prices for islington property

march 2012

23%

increase in first time buyers nationally

jan 2012 compared to jan 2011

£4.3 million

Price paid by phone bidder at Sotheby's

in February for abstract painting

by Gerhard Richter

source: forbes

Focus on local

Clerkenwell market

Budget 2012 - Clerkenwell a winner? With the

vast majority of sales under £2 million, good

value for money could mean escalating demand.

Starting to shine

Even before the latest measures in the

Budget were announced, Clerkenwell

as an area was rising in the popularity

stakes. Its ideal geographical

positioning has resulted in buyers,

frustrated by the lack of stock, high

levels of competition and escalating

prices in other areas, now considering

Clerkenwell almost by default. The

forthcoming Crossrail link has also

provided a further stimulus to entice

buyers to the area.

We expect the recent Budget

announcements and, in particular the

higher stamp duty charge on property

sales over £2 million to provide a

further boost to demand in

Clerkenwell. In 2011, just 0.5% of

property sales in Clerkenwell were

over the £2m threshold. Purchasers

who were looking in nearby areas

around the £2 million mark may be

drawn to Clerkenwell, where not only

60%

50%

40%

30%

20%

10%

0%

clerkenwell less affected

by stamp duty changes

Clerkenwell Islington West End

Under £250k

£250k-

£500k

can they buy more for their money

but are less likely to incur the

additional tax burden.

The area covered by the Winkworth

Clerkenwell team encompasses many

different distinct submarkets to cater

for a huge variety of demand. In the

past year, highest average sales values

for flats were to the south of our

market area between the river and

the Holborn Viaduct, taking in the

area around St Paul's and the City. This

area performed most strongly over

the past year with average prices

achieved for flats rising by 11% to be

just under £600,000.

Stock remains in short supply

In general, the Clerkenwell market is

still constrained by low supply

although not to the extent of other

nearby areas. Indeed we have begun

to see levels of new instructions rise.

Properties which come to the market

in the most desirable areas are

generating significant amounts of

interest with sales often resulting in

sealed bids.

With the majority of properties in Clerkenwell

priced at less than £2m, the recent budget has not

been detrimental to our market. Indeed, it may

encourage buyers from nearby areas. ralph shand clerkenwell

£500k-£1m £1m-£2m Over £2m

£600,000

£500,000

£400,000

£300,000

£200,000

£100,000

£0

clerkenwell comprises a number of

distinct sub-markets

Ave flat price 2011/2012

Kings Cross

/NW Finsbury Finsbury

Grays Inn

Clerkenwell

/Smithfield

St Lukes

Barbican

St Pauls

/City

source: land registry

source: land registry / Dataloft


Lettings news

Lettings in Clerkenwell

Strong ties to City prospects

The rental market of central London

has enjoyed a strong couple of years.

As the London economy recovered and

the number of new tenants looking to

rent outpaced the ever dwindling

supply of new properties to the

market, rental values grew strongly.

Overall growth in average rents of 25%

since Q3 2009 meant that by mid-2011,

average rental values had surpassed

their previous peak level.

The fortunes of the central London

rental market are very closely linked

to City employment prospects.

Therefore, it was of little surprise

that as confidence in the wider global

economy deteriorated and job losses

in the City became more apparent

towards the end of 2011, so the

rental market weakened. CEBR

(Centre for Economics and Business

Research) suggest that 27,000 City

jobs were lost over 2011 and this ties

in with a 4% fall in rental values

over the second half of the year in

central London.

The lettings market in

Clerkenwell is relatively

quiet at the moment

which is not unusual for

the time of year.

However, in recent

weeks, we have

experienced an uptick in

enquiries and expect this

to translate into rental

values over the summer.

Outlook for the market

Prospects for 2012 are very much

dependent on confidence (and

tenants) returning to the market. The

CEBR do not foresee a net fall in City

jobs over the year. With stock being

let quickly in Clerkenwell, we expect

the market to be able to absorb any

increases in supply fairly easily and

would expect some increases in rental

values this year.

average sales prices last 12 months

House

Apartment

Clerkenwell £1,300,000 £480,000

West End £2,600,000 £750,000

Islington £825,000 £360,000

latest annual growth

-0.6% 4.2%

England

& Wales

source: land registry

London

city employment and rents

London Rents (RICS net balance reporting a change)

City Employment change (CEBR)

100 10%

80 8%

60 6%

40 4%

20 2%

0 0%

-20 -2%

-40 -4%

-60 -6%

-80 -8%

-100 -10%

Apr 01

Jan 02

Oct 02

Jul 03

Apr 04

Jan 05

Oct 05

Jul 06

Apr 07

Jan 08

Oct 08

Jul 09

Apr 10

JAn 11

Oct 11

Jul 12

JAn 13

source: RICS / CEBR

ralph shand

Sales Manager

020 7405 1288

rshand@winkworth.co.uk

john mcdavid

Sales Manager

020 7405 1288

jmcdavid@winkworth.co.uk

matthew higson

Property Management

020 7691 4260

mhigson@winkworth.co.uk

myriam chabanel

Lettings Manager

020 7405 1266

mchabanel@winkworth.co.uk

This factsheet has been compiled by

Dataloft, www.dataloft.co.uk

Disclaimer: This report is produced for general information only. Whilst every effort has been made to ensure the accuracy of this

publication, Dataloft Ltd and Beamray Ltd accept no liability for any loss or damage of any nature arising from its use. At all times the

content remains the property of Dataloft Ltd under copyright and reproduction of all or part of it in any form is prohibited without written

permission from Dataloft Ltd.

Date of publication: April 2012

Beamray Ltd trading as Winkworth, 55 New Oxford Street, London WC1A 1BS

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