Interest rate rise and how to navigate the current buying market
Yesterday’s 0.25% interest rate rise was not a shock to the market so we do not believe there will be a significant short term reaction from the central London property market.
We are seeing very few highly leveraged central London buyers; most of the clients we are acting for are either paying 100% cash or borrowing no more than approximately 65% of the purchase value.
The buying market remains complex due to factors including Brexit, stamp duty, currency fluctuations and interest rate uncertainty. We particularly enjoy advising clients in this type of market environment as we are able to add significant value and insight to the process.
With some of the transactions we are handling, we have faced competitive bidding scenarios for certain properties, whereas we have negotiated large price reductions on others.
Price per square foot remains a key pricing and value indicator, and any buyer making an offer in this market without in-depth price per square foot information should be very cautious.
Buyers also need to be mindful of the sensitivity required when buying in these market conditions, as sellers are easily offended and bridges can be burned with sellers and estate agents quickly if the right bidding strategy is not adopted from the outset.
We were recently contacted by a client who had found a substantial family house in Chelsea. Having initially bid nearly £1.25m below the asking price, he quickly found that he had discredited himself with the seller and estate agent as he did not have access to complete pricing information. When another buyer came onto the scene, it was extremely difficult to re-position him as the more credible buyer due to his earlier bidding approach.
If you are buying in the current market, there are genuine opportunities for buyers but the search and buying process need to be correctly handled in order to extract the maximum value.
If you would like to speak to our Buying Team, please contact Oli Russell on: +44 (0)20 7244 4485.