The dominance is of the cash buyer is such because vendors want certainty of transaction. Mortgage buyers will often need to sell an existing property and or seek final approval from their mortgage lender which can either delay completion or result in a deal falling through. In Prime Central London, in the market up to £1.5m, we are seeing roughly 50/50 cash buyers and buyers who are using mortgages. Above £1.5m, the cash buyer proportion increases to approximately 90%.
WHO IS BUYING?
Buyers remain a mix of domestic and international. The domestic market is made up of couples whose children have recently left home and who are seeking to downsize from larger 3000+ Sq ft properties in Richmond, Wimbledon or South West London and who want to be nearer the centre of town and will look at Knightsbridge town houses of 1,500 to 1,800 square feet. They try to transact at nil cost (so sell for the same amount they buy for).
The international market is slowly coming back to life with enquiries from Europe (plenty of Italians and now wealthier Germans) and a few Americans buoyed by a slightly weaker pound. The natural GCC buyers are slowing down as the toll on oil revenues start to take hold but we are still seeing Asian money being put to work in traditional homes rather than new builds. The new Asian buyer tends to want a home rather than a buy to let and will, if possible, seek to move to the UK with their family. We have also started to see more enquiry from younger professionals who now have enough cash for a deposit and want to buy in an areas with little price volatility (usually with a mortgage).
PRICES
The most active price range for the time being is up to £4m which includes the young professionals (up to £1.5m) and the international buyers (up to £4m). We do however still have UHNW who are spending upwards of £10m but they are largely unaffected by stock market moves or other economic pressures. Naturally they buy for cash, depending on their tax advice.
TRADITIONAL v NEW BUIILD
For the most part, we are now seeing buyers look at old (traditional) homes rather than new builds. New Builds have not traded that actively or successfully in the secondary market as vendors are often unwilling to lose the premium they might have paid on purchase.
AREAS
There seems to be a resurgence of activity in Mayfair, driven by new Middle East buyers and the Indian sub-continent but the Europeans still prefer Chelsea. Fulham seems to have become quite expensive with prices knocking on the door of Chelsea (in absolute terms rather than pounds per square foot) thereby eroding some of the perceived value of that market. This was driven by international families and RBKC families seeking larger accommodation as well as French Buyers (due to the proximity of the Ecole Marie d’Orliac). South West London (Battersea and Wandsworth) have also been well bid recently as families seek good local state schools and more room and this has pushed prices up.
Nevertheless much of the prime London (as opposed to Prime Central) market price increase has been driven by mortgage debt and as such international buyers (investors as well) are now tending to enquire about less levered areas.