Mortar, mortar everywhere
... but just try buying somewhere to live in central London.
One of the country’s most respected commentators on Russia, the EU and the US, Mary Dejevsky has worked as a foreign correspondent all over the world, including Washington, Paris and Moscow. A former diplomatic editor and chief leader writer at The Independent, she now writes a weekly column and makes regular contributions to UK and international radio and television. She is a member of the international foreign affairs think-tank, Chatham House, the Valdai Group of international Russia specialists and the Franco-British Council. She also sits on the advisory board of the School of Slavonic and East European Studies at University College London.
Saturday 15 February 1997
Either (in the case of W1, WC1, SW1) there is nothing on their books because no one is selling: "We didn't even bother to compile a list for January," they say, "there's nothing coming in." Or (W8, SW3, SW5) everyone is run off their feet showing flats around the clock. If you ring, there is no one in the office because they're all out with clients.
Any half-habitable flat is said to be "flying out of the window" even before anyone has had time to type out the details. "We're just so busy. It's wonderful for us," confided one receptionist against a cacophony of ringing phones. It's not so wonderful for us.
On the surface, London seems to be back in the vicious circle of 1988: too little to buy, too many people chasing after it and everyone well into gazumping mode. Perhaps it is worse. Last time, there was a temporary and quite specific reason for the frenzy: the new restrictions on mortgage interest tax relief. The bubble soon burst.
This time, the common wisdom is that we are experiencing the biggest boom since the late Seventies. Interestingly, a dissenting voice comes from the Royal Institute of Chartered Surveyors whose spokeswoman gives a number of reasons why an enduring boom is unlikely: the cautious budget, the election, a probable reduction in MIRAS and no change in stamp duty.
Estate agents and vendors understandably prefer the boom theory, which helps to explain our problems as buyers. Why should anyone sell their flat when they can expect another 15 per cent for it next year? And if they do sell, why should they settle for anything less than a price that anticipates that rise? Whether people are prepared to buy at any price, just to have a stake in the supposedly rising market, is another matter. After a long weekend of concentrated flat viewing in central London, I was left with the suspicion that the current "boom" may be artificially fuelled by some estate agents and vendors and that it is not a real reflection of the market.
The agents concerned will object that the market drives itself, that any flat is worth just as much or as little as someone is prepared to pay for it, and that there is a real shortage of properties. All that is true. But it takes a genuine bidding situation and genuine information to judge what is a fair price, and not the febrile imaginings of the sale- hungry.
Taken to see a couple of flats last week that were still being renovated and not yet on the market, we were told that if we wanted to make an offer, "think of a number, the price hasn't been set yet". We were effectively invited to take part in an auction with no reserve and no guide price. That's how hot the competition is supposed to be.
At another flat, also being renovated but advanced enough to have an asking price (though no printed details), we were told: "We've already had an offer at the asking price, but we haven't accepted it." The renovator (and owner) muttered in the background that he thought the asking price too high.
Some agents are shamelessly encouraging gazumping. I was taken to see two flats in one block. One, at what seemed a very reasonable price, was under offer. The other, which seemed overpriced by comparison, was not. To the agent's horror, a family was waiting in the lobby (the family, it transpired, that thought it had bought the first flat). I was whisked past, rushed to the flat in question, raced around it (to be gone before the family arrived to measure up), then taken to the other flat.
A justification for this comedy might be the usefulness of comparing the size and price of the two flats. But the subsequent conversation contained a strong invitation to bid for the first flat, with the asking price "as a floor". Maybe the agent thought that the buyer, who wanted several flats in the block, would either increase his offer or switch to the more expensive flat - to the mutual benefit of agent and vendor.
The saga has a sequel. We made an offer for the larger flat, which was rejected. Spun tales of spiralling prices, vicious bidding for other flats in the area (but not for this one), we upped the offer. A misdirected fax subsequently made clear that, first, this was 10 per cent more than any similar flat in the block had ever fetched and, second, that the price had recently been de facto increased by the removal from the package of several parking spaces (hitherto included in the same price).
We withdrew; the vendor, a company, is prepared to wait. But the experience prompts some thoughts.
Perhaps the statutory duty on estate agents to provide accurate particulars should be augmented with a requirement to state when a flat was put on the market, at what price and on what terms. Ideally, the prices achieved at sale should be published, as they are in some countries. Then we buyers could judge the market for ourselves and not find ourselves unwittingly driving it.
And, contrary to what you may hear, there are central London flats on the market. Some of them have been there for a good many months now, unsold because of their poor condition, their high service charge or their less than ideal location. They are available because sellers and agents will not reduce the price, anticipating that the market will "rise to meet them". Maybe it will, but the fact that buyers are resisting shows that we still have a modicum of common sense.
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