One of prime central London’s most respected estate agencies is warning that it could take until spring 2021 for the luxury market to resume - but when it does come back, there’s likely to be a mini-boom.
Beauchamp Estates says there’s likely to be three distinct phases to the resumption of business in the most high-value areas of the capital.
The first - which the industry is now in, and will last for some months to come - is likely to revolve around a quarantined London with agents focused around virtual viewings, remote liaison and people making reservations on properties, especially new build or unoccupied homes.
“During this phase luxury rentals are also going to be in strong demand particularly as most London hotels have closed down” notes Beauchamp.
The agency calculate that during this first phase in the cycle, the market for second-hand occupied London homes priced below £5m million is likely to see a 60 per cent to 90 per cent drop in volume of sales over the first six months of the year with completions delayed until the quarantine lifts.
For London homes priced above £5m, the agency anticipates the drop in volume of sales will be considerably lower since many properties are unoccupied and acquired by cash buyers. Any impact on prices is likely to be minimised as most buyers are just delaying their purchases rather than walking away, it says.
The second phase in the cycle - again lasting some months - will be when people have taken a virus-antibody test and, if some level of immunity is proven, are able to return to office work.
“This phased return to work, which China is now starting, will help assist the economy and property market, even if bars, restaurants and clubs remain closed” forecasts the agency.
The third phase is a lifting of quarantine measures and a gradual return to business activities.
Beauchamp predicts that this third phase in the cycle could happen between October this year and March 2021 with the London economy and property market anticipated to have a mini-boom similar to that which occurred post-Brexit. On that occasion - just a few months ago - the capital had over £750m worth of deals for properties priced above £5m in a few weeks as pent-up demand was released and buyers purchased properties they had coveted during the Brexit stagnation period.
Beauchamp’s three-phase ‘traffic light’ prediction is based on its analysis of how the Chinese, Hong Kong and Singaporean property markets have performed over the last four months, cross-referenced with LonRes data for transactions in London from the New Year until early this month.
“It is difficult to forecast how the London property market will perform during the Coronavirus pandemic but China and other Asian countries have started the second phase of the cycle which is why we feel the London market will go through a series of distinct phases” explains Gary Hersham, founding director of Beauchamp Estates.
“Our clients expect us to adapt which is why Beauchamp Estates has launched a special virtual viewings portfolio, stepped up marketing online, switched to remote working and is overall staying active.”