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No dog days for determined property buyers, says Black Brick

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With the school holidays underway, and minds turning from work towards beach getaways, property market buyers could be forgiven for deciding to take a break until September. But according to London-based property consultants Black Brick, as in many markets, it can often pay to take the contrary view.

Black Brick points out that with fewer other buyers active, there is less competition for attractive properties. Second, psychology is on their side. Those vendors who have not secured a sale before July will often assume that they are stuck until after the summer, when they might face tough questions about how long their property has been on the market: an offer in July or August can be attractive from that point of view.
 
Black Brick admits that there are good reasons at present why buyers might be cautious. Continuing post-election uncertainty, and an ongoing lack of clarity around the Brexit process, are giving some buyers pause. Recent price falls in Prime Central London are also leading potential buyers to ask whether further declines are likely.
 
On the other hand, the company is seeing vendors becoming more realistic about asking prices and, for buyers and agents that can tap into the off-market segment, activity levels are higher than the headline figures might suggest and Black Brick has closed a higher number of transactions than last year. This increased activity is a function of the current market: feedback from our clients is that the relative lack of transparency is encouraging them to use a buying agent as a means to access market intelligence.
 
“It’s more difficult and more time consuming to get a good sense of where the market is,” says Camilla Dell, Black Brick Managing Partner, who adds that the higher transaction costs involved in buying a property, especially as a result of increases in Stamp Duty, increase the costs of getting it wrong. “Using a buying agent is a bit like taking out an insurance policy: it can help protect buyers taking a hit from the wrong decision.” 
  
Black Brick says that the foreign ‘buy-to-leave’ investor has become one of the favourite whipping boys of those concerned about London property prices. They complain that overseas buyers are driving up prices, and then leaving their properties unoccupied, exacerbating the city’s housing problems.
 
London Major Sadiq Khan commissioned the London School of Economics to study the role of overseas investors in London’s residential market. It found that while a “significant proportion” of total sales (around 10 per cent, when including affordable and social housing) were to foreign buyers, it found almost no evidence of buy-to-leave. Instead, more than 70 per cent of properties were let out to local renters, with the rest used for family members (often students, or for work or holiday visits).
 
These statistics coincide with Black Brick’s data – so far this year only one of the firm’s transactions to overseas buyers has been for a second home, with the majority being primary residences or buy to let.
 
Crucially, the report also looked at the role of these buyers in helping builders undertake new developments. It found that off-plan pre-sales to overseas buyers, often two or more years before completion, play an important role in financing new housing development in London. At the same time, overseas investors have been heavily involved in many of London’s large-scale Build-to-Rent developments. Overseas buyers and investors, then, have enabled developers to build faster than otherwise would have been the case.
 
“That the UK in general and London in particular is open to overseas buyers does introduce more competition into the market, but it also offers clear benefits,” says Black Brick Partner Caspar Harvard Walls. “It is helping to get properties built and Londoners housed. Hopefully this report will help to take some of the heat out of the debate about the role of foreign buyers in the London market.”
 

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