January 2024 Property Market Overview
St Katharine Dock & Wapping: Navigating Turbulent Waters
Date Posted: 22/01/2024
As we enter the new year, a retrospective analysis of the UK property market reveals a journey marked by twists and turns. The 'Boris Bounce,' a post-2019 General Election phenomenon, initially injected positive momentum into house prices. However, optimism was short-lived as the pandemic took center stage in 2020, leading us into an unprecedented lockdown. Emerging from the lockdown resulted in pent-up demand in 2021, and the market, fuelled by buyers forced to delay their moves, saw house prices catapult even higher. But the tides shifted in 2022, and as the market began to cool and high inflation crept in, a staggering series of 14 interest rate hikes followed, spanning late 2022 and most of 2023. These interest rate hikes, implemented to curb inflation, created a scenario where affordability suffered a substantial blow. Buyers, facing increased borrowing costs, found themselves re-evaluating their plans, once again putting moves on hold. And now, in the opening weeks of 2024, signs of positivity have emerged once more. A lender price war is underway, mortgage interest rates are back below 4%, buyer confidence is on the rise, and buyer enquiries are through the roof. However, it's another election year, and the possible return of the Labour Party brings uncertainty, especially for overseas buyers facing potential tax changes. While the Conservative Party is keeping its cards close to the chest, reforms may be on the horizon. With the Spring Budget just around the corner in March, one wonders what property market-focused initiatives could emerge to secure much-needed support. Watch this space.
Impact on St Katharine Dock & Wapping (E1W) in 2023
The E1W property market has experienced notable fluctuations over the past 5 years, reflecting broader national trends. What you may not expect is that there were 403 completed sales in 2022, a figure almost 400% higher than that in 2023. We understand that sales in the area were impacted by rising borrowing costs, prompting many to postpone their moves. Yet, it's essential to note that a significant number of new build sales related to the London Dock development by Berkeley Group on Gauging Square and Merino Gardens were completed in 2021 and 2022. When these related sales are excluded, the 2022 figure reduces by more than half to 183. While still significant, this reflects a more moderate 45% decrease compared to 2023. It’s a trend which aligns with sales in the wider London area and offers a clearer depiction of the impact on transaction volumes.
Likewise, if you examine the average sold house price data for the area without understanding the nuances, decisions based on context-lacking information may be misleading. Consider the scenario where E1W saw an average price decrease from £1,045,782 in 2022 to £626,691 in 2023, a significant 40.07% reduction. While this is factual, it doesn't imply that the value of your home has dropped by 40%. It's essential to consider the sample size, as we discussed when reviewing transaction volumes. Additionally, it's crucial to recognise that there were only 9 sales exceeding £1m in 2023 compared to 188 in 2022, primarily due to the London Dock development.
Understanding Average House Prices in E1W
The London Dock sales in 2021 and 2022 not only skewed transaction volumes but also impacted average house prices in the area. The average sale in the development was £1,308,109, and when related data is excluded, the overall average in E1W for 2022 stands at £730,417. While this difference is still significant, we're now looking at a 14.20% decrease in averages instead of 40.07%. It's important to clarify that this doesn't imply all homes in the area have depreciated in value. In fact, many will have appreciated; different properties are affected in various ways for several reasons. These figures only represent averages. Also noteworthy is that prior to the London Dock sales, the average property price in 2020 was £687,619. While current prices remain 8.86% lower than this, it's crucial to consider the impact of the Stamp Duty Land Tax (SDLT) holiday between July 2020 and June 2021, which temporarily boosted house prices; this should ease the perceived severity.
A noteworthy sale in 2023 was a stunning apartment in Sanderling Lodge, Star Place, achieving £2,500,000. While this was a rarity, with only 9 sales surpassing £1m last year—a stark contrast to the two years prior—expect a significant upswing in sales at the higher end of the market in 2024.
Trends and Developments in E1W
City flats, once unpopular during the pandemic, are making a comeback in central London, a trend that aligns with the reopening of offices. In 2023, six out of ten homes purchased were flats, especially in sought-after locations like SW1. This resurgence is particularly noteworthy for E1W, offering a great option for central London homebuyers, as 90% of the homes sold here were flats in 2023.
Saffron Wharf, the latest phase of the London Dock development, is being completed in stages from Spring 2024 through to Summer 2025. Given the success of the London Dock development so far, Saffron Wharf is expected to generate substantial buyer interest. With 'value' being the word of the year for homebuyers, borrowing costs still higher than the record-low interest rates we've become accustomed to, E1W is likely to attract more buyers who may not have previously known or considered the options available here. After all, where else can you find such a unique waterside lifestyle for the value of E1W in central London? Nowhere.
Current Market Status in E1W
A review of the current market reveals 116 homes for sale in E1W, slightly lower than the 5-year average of 118. Notably, only 7.59% of homes with an asking price of £1m or more are under offer/sold subject to contract (SSTC), and 40.25% of homes in this market segment have reduced their asking prices. This suggests that the pricing strategy is often incorrect from the start. It is significant because data from Rightmove indicates that reduced properties are 10% less likely to go SSTC, take double the time to reach SSTC, and, if the property does go SSTC, the sale is twice as likely to fall through.
Therefore, while it's important to recognise that every homeowner aims to achieve the best possible price for their property, if you're considering a sale, it's essential to seek advice from a trusted advisor who is honest and transparent, understands the market, can present a proven marketing strategy for this market, and, most importantly, is not incentivised to market your home for sale, but to make your move a reality.
I hope this update has helped you gain a more comprehensive understanding of the current property landscape where you live so you can make informed decisions. Please feel free to contact me if you have any questions or if you would like more personalised advice. I'm available to help and provide insights tailored to your specific situation.