Lucian: “There have been a number of factors which have driven a remarkable period of performance across the UK housing market since the first lockdown ended. One of the key drivers has been the lockdown-induced race for space, with people looking to upsize, or just to reassess their priorities. To a degree that was turbo-charged by the Stamp Duty holiday.

“If we look at supply and demand versus 2019, levels of agreed sales have exceeded normal market conditions since the market reopened. This has come against the context of a limited amount of supply coming into the market. At the end of March this year, stock levels were around a third lower than what we would normally expect at that point in the year.”

Lucian: “The race towards the country has meant that stock shortages are more pronounced in areas such as the South West. That said, although London has been behind the curve, agreed sales in the capital in March were 37% higher than normal market conditions, and higher than any other region, suggesting a refocusing back to the capital as we return to work and rediscover the joys of living in the city.”

Lucian: “The squeeze on household finances due to spiking inflation and four successive interest rate rises has meant that the market has become segregated. The top end of the market, which is less reliant on debt, has remained far more active than other parts of the market, which have seen a slowdown since the Stamp Duty holiday ended.”

Lucian: “The desire for country living means there has been a distinction in terms of pace of recovery across different parts of the prime market. The star performer has been the country house market in the £2m+ category. Over the past two years, prices have increased by an average of 20%, with other regional markets up by close to 15%.

Prime Central London, which has largely become confined to domestic buyers and resident non-domiciles due to restrictions on international travel, has only seen 1.9% growth over the last two years. At Savills we believe this presents a strong buying opportunity, particularly as we expect price growth to pick back up as international demand re-enters the market.”

Lucian: “Based on Savills’ price forecasts, we think there is the prospect for strong price growth in the Central London market over the course of this year, with a forecast of 18% growth this year, and 24% over the period of next five years.

“It’s worth noting that a lot has changed since we compiled these forecasts in November 2021, not least in respect to geopolitical events and the war in Ukraine. Russian buyers have been a relatively small component of the market since 2012, therefore absence from the market is not a significant issue. However, there is greater scrutiny on where wealth is coming from and that has the potential to temper what we might otherwise expect at this point in the market.”

Camilla: “There are some things you can do to try and help uncover off-market opportunities. Firstly, build great relationships with the relevant estate agents in the area you’re looking to buy in. Make sure they know you and what your buying position is, and whether you’re a cash buyer. If you’re taking finance make sure you let them know you have mortgage approval and a solicitor in place, to try and ensure you’re the very first person they call.

“The reality of course is that a lot of people are time-poor, so there are benefits of outsourcing search completely to a buying agent, which is what Black Brick does. We recently invested in technology which enables us to bring up off-market properties that specifically meet clients’ criteria, so that we can then make targeted approaches to these owners to see if they might be interested in having a conversation. With an off-market property you sometimes have to pay a larger price, although it can be worth it if it really is the home, you’ve always wanted to own.”

Lucian: “There’s a distinction between the mainstream and prime markets. Strong price growth in the mainstream market, along with the higher interest rate environment, puts a squeeze on affordability and that should act as a drag on price growth, once we get past the supply / demand dynamic. However, this pincer effect could be relaxed by the Bank of England’s proposed relaxation of mortgage regulations. That will offset some of the interest rate rises.”

Camilla: “At the beginning of the year, the anticipation from those in the market was that London would be flooded with international buyers having been starved of their property purchases for the last two years, but the reality is that hasn’t transpired.

“It’s difficult to pinpoint exactly why people aren’t coming back in the numbers that we were expecting, although geopolitical uncertainty could be one of the factors. But as we approach summer, we’re expecting a busier market.”

Lucian: “The bounce back in the buy-to-let market has been remarkable; we’re seeing a scramble to get hold of rental property as people have returned to the city after lockdown. We’re now left with a significant shortfall on rental stock and landlords are cashing in on rents that are higher than they were pre-pandemic. But there are other pressures, depending on whether you have mortgage debt or not; rates have gone up, and there are restrictions on tax relief.

“If you are going to leverage yourself heavily you need to look closely at the maths first.” 

Camilla: “As a landlord you’ve got to look at who your target market is. The biggest demand is flats; buying a house is riskier and you’ve got to anticipate longer void periods while you find the right tenant.”

Lucian: “For me, the best market is in small houses. Although they don’t show the same income yield and can’t compete with flats on that basis, they have better prospects for capital growth. That’s because buy-to-let demand is likely to be supplemented by more owner-occupier demand as you go forward.”

Camilla: “Over the course of the last two years, many of our clients have taken on properties that require building work, and to a certain extent that comes down to lack of supply on the market.

“If you are looking at buying a property that needs work, it’s important to get independent advice so you go into the transaction with your eyes wide open as to how much the work is going to cost, how long it’s going to take, and the sorts of permissions and consents you’re likely to need.” 

Camilla: “If you’re looking to buy a home for the foreseeable future, the most important thing to ask yourself is whether this is the right property for you and your family. So often clients become focused on whether it is a good investment, and lose sight of whether it is the right home.” 

Camilla: “Crossrail benefit has already been priced into the market. We may see a slight uptick once it’s up and running, but fundamentally I wouldn’t necessarily use that as a key driver towards buying near to a Crossrail station and anticipating huge amounts of capital growth because of that.”

Lucian: “Five to seven years is a slightly uncomfortable time period. If you look at the amount of Stamp Duty you’ve got to pay and the level of rent in the alternative scenario, it may be that the difference between the two isn’t that dramatic.

“It does depend on where you’re buying though. In Prime Central London, for example, there is the prospect of strong price growth over the next five to seven years. But if you’re buying in the mainstream market, it will be more difficult to see the suitable price appreciation to make it a compelling buy.” 

Camilla: “For me, I treat new builds almost as a separate market with different drivers, as most domestic buyers aren’t that interested in a new build, they tend to be more interested in houses with outside space. 

Lucian: “It’s quite difficult in the current environment to see the trigger for a major correction in prices. Employment is strong and we are currently reasonably well-insulated against increased interest rates.

“The thing that would cause me concern would be any further major increase in interest rates, particularly if that were combined with a recessionary environment.”

Camilla: “The problem is it’s a sticky market, meaning people’s ability to move is very restricted currently. Prospective sellers themselves have nowhere to move to and there is no sign yet that supply is increasing. I think this current market is set to stay for some time yet.”