When is the best time to buy a mews house?
Since Brexit we have been inundated with calls from both sellers and buyers (and from journalists!) asking how it will affect the Prime Central London property market..
We could debate for days whether this is a seller’s or buyer’s market however, it is said that the best way to predict the future is to study the past.
Unless you can take advantage of a running scared European seller, mid Brexit is probably not the best time for the short term speculative property dealer looking to flip properties for quick profits. However it is a good time for the long term investor/owner occupier looking to buy the best property in the best locations with less competition at more sensible prices.
In 2012 a client of ours predicted a property crash so sold his mews house hoping to take advantage of what he thought would be a collapsing market. The market did the opposite and he ended up buying the very same house back for £650,000 more than he sold it for. A decision which lost him £15,476 a month before costs.
If the market is flat, or falling, the temptation to remain out of the market and rent should be avoided as you will squander in rent whatever you may gain by trying to play the market. Plus you will miss the moment when you should have bought to make doing so worthwhile.
Unlike any other investment a Prime Central London house is on every investor’s wish list. Not only will it keep rising in value, it will normally have some kind of development opportunity (which if you live in it will bear tax free gains), plus it will always let well.
Since London was built its houses have outstripped wage growth. To Take Holland Park Mews as an example you will see, from these smoothed graphs below that their value has grown, from their original 1870 sale price of between £85 – £147, to our recent record sale price of £3,310,000.
By the end of the First World War they had risen to over £1000, when they were increasing at an average of £83 per year and when the average middle class wage was a steady £150 per year.
Between 1991 – 2016 they have risen to £3,000,000, an average of a potentially tax free £120,000 per year, while the average London gross wage is £48,000 per annum.
It has been long said that if you earn more than your London house appreciates you are doing very well indeed. The average ownership of a London house is now ten years and in that time houses in Holland Park Mews have doubled in value, which is £1,500,000 tax free pounds. The year before the Credit Crunch of 2008, Holland Park Mews averaged sale prices of £1,570,000, however by 2011 they had increased to £1,810,000. Only one house sold in the blood bath of 2008, for £1,001,000. It was number 35 which was sold again in September 2014, this time for £2,540,000.
All of this said, we can only sell a house in the market we are in and it is important to remember that all properties go up and down on the same tide.
As quoted in Bricks & Mortar 9th September