Waiting for bonus buyers - Simon Barnes

Vendors: Don't wait for buyers with bonus pay-outs!

The last quarter of 2009 has seen a notable increase in activity in the mid-top end London market, with prices reaching 2007 levels in some cases - a result of an imbalance in the demand/supply ratio leading to a rise in prices. However, we are now beginning to see a trend whereby vendors are failing to benefit from the recent boost in the market, preferring to wait for bonus payouts scheduled for the early months of 2010.

Many vendors are rejecting good offers on their properties in the belief that once city workers receive their bonuses, there will be more money in the market, more demand for property, and therefore more pressure on stock, which could lead to higher prices being paid.

Vendors are failing to consider the possibility that those in receipt of bonuses will in reality be unlikely to pay premium prices for property, and will be more intent than ever on finding the best deals. There has historically been excitement in the London market at the beginning of the year as bankers hit the market ‘en masse’ with bulging wallets - extraordinary deals have been achieved and large sums of money have been exchanged. But this year, it is important to remember that bankers have been at the sharp end of the economic downturn and will certainly be more wary of how they spend their money. Job security is no longer taken for granted, so those who might have been partial to an impulse buy in the past, will likely take a cautious approach this time around.

There is also the question of whether bonus recipients will be buying property in London at all. Although there may be a ‘new tier’ of young bankers looking to spend their money in the capital, those who benefitted from the last wave of good bonuses and who already have their homes in popular locations such as Kensington, Chelsea, St John’s Wood or Notting Hill Gate, will not be looking to move. Having paid premium prices for spectacular properties in the ‘bankers enclaves’ of Cavendish Avenue, The Boltons or Holland Park, they would find it very difficult to improve upon their current property – in effect they have already reached the top of the property tree. Some would have embarked on lengthy renovations, and having bought in 2005 or 2007, will only just be beginning to enjoy the benefits of their last purchase and will therefore stay put.

Many may be much more inclined to invest their money on country, or even overseas property, or other assets such as boats or cars. There is of course much talk of hedge fund managers looking to leave the London market altogether, in favour of tax efficient destinations such as Switzerland.

Advice to vendors is clear – if you are getting asking price offers, you should very definitely be taking them. One thing everyone seems to be agreed on is that 2010 is something of an unknown quantity and with or without the presence of bonus money, it would be unwise for vendors to procrastinate!

Simon Barnes

Simon Barnes Property Consultants offers a bespoke buying (and selling) service to a small number of private clients, advising on all aspects of property transactions. Simon operates primarily within the top end London market, but also works with clients who are buying and selling overseas. www.simonbarnes.com