Every week, Marc Da Silva poses some questions to a senior figure in the UK property industry and this time, he turns his attention to the South Coast and Michael Riley, who runs a specialist estate agency dealing in some of the region’s most sought-after locations.
Could you please give us a brief introduction to your company and the area in which you operate? Capital & Coastal is a hybrid estate agency specialising in the sale and let of property with water frontage, sea views and coastal locations between Poole Harbour and the Lymington River.
I founded Capital & Coastal in 2009, following former positions as head of sales for Savills and head of operations for Romans in Basingstoke. Capital & Coastal is a mid- to a high-end online estate agency, which not only provides services for clients buying and selling residential property along the South Coast, but also in other parts of the south, mainly London.
Capital & Coastal are currently recruiting a series of senior non-exec positions to assist and advise with our growth. We are looking to grow organically and by acquisition of sales and letting businesses from Poole Harbour to the Lymington River and are looking for people who are considering selling their business now or in the not-too-distant future.
What types of properties do you sell and let? There is certainly a wide style range in the areas that we operate in, from modern coastal homes to ones that are quirky with an abundance of character. The majority of our business is done within the middle to upper end of the market, properties between £300,000 up to £1m. Many of the properties we sell are original and interesting, and many of them have beautiful views over the sea or harbour.
Similarly, the rental market here offers all types of properties giving tenants a varied choice. The corporate lets sector is one that we work heavily in and we spend a lot of our time sourcing and securing properties on behalf of companies for one of their executives, some of whom want big fancy houses and others request a more modest property.
What is the property market currently like in your area? The property market is currently proving to be extremely buoyant from a demand perspective, as predicted at the start of the year. However, the number of sellers coming to the market place has been lower than normal across the south region and running up to the Thames Valley, where agents are reporting an extraordinary shortage of stock.
There was some good news recently though, when the Chancellor announced a new legislation, the First Time Buyer ISA, which comes into force in the autumn. This will provide an attractive saving scheme for FTBs where the government provides 25% in addition to any savings that have been made by buyers looking to get on the early stages of the housing ladder. This is an extremely pleasing move and will help further stimulate the bottom end of the market which is already in high demand from buy to let landlords and people with large pension pots who can now use those funds to purchase investment properties.
Unlike the lower end, the top end of the market above £1.5m is currently struggling with levels of demand. This goes to show that the government’s stamp duty reform following the Autumn Statement has further affected this market place with significant increases. We are now urging the political parties to reassess stamp duty once again and look at regionalising this tax. It is unfair that high-value properties outside the capital should be penalised because the government would like to restrict the rate of growth in London.
How much do properties typically cost to buy and rent in your region? Prices are very dependent on exact location here, with spectacular views commanding a huge premium. Generally speaking, prices range between £120,000 and £200,000 for a one-bedroom apartment and £200,000 to £375,000 for a two-bedroom apartment. For a three-bedroom house prices start from around £350,000 and can go up to £550,000. For properties with four bedrooms or more, prices can go up to as much as £1million. You can double the prices for property on the water or with a view.
On the rental side, a one-bedroom apartment commands a rent of around £775 per calendar month and can go up to £3,000 per month for a four-bedroom house.
Are there any particular areas in which investors should be looking to buy property? There are a few areas that are less well known as others and have been undervalued, including Southbourne, Mudeford and also Boscombe, which is an interesting and quirky place to be. If I am being really specific, then Pokesdown, the area just north of Southbourne Grove, is a great area that provides lots of potential for investment as properties are a bit cheaper. Prices have been lower here for a while.
What do you expect to see happen in the local property market during 2015? The mortgage market has performed better than expected over the last three months and most notably loan-to-value figures have increased with smaller deposits now being required which has stimulated the bottom end of the market. I predict that the next three to six months will see continued strong demand for properties up to £500,000 and a shortage of stock in properties between £500,000 and £1million.
Above £1million the market will remain patchy and very much dependent on the unique selling points of each particular property. Properties that do not have a view of the water will find demand is subdued due to onerous stamp duty legislation and people trying to downsize.
In 2015, we have seen an increase in the number of London purchasers moving out of the capital which at points during 2013 and 2014 was quite low. The reason for this is that many sellers coming from London have realised that the market there has peaked and now is a good time to sell up and move towards the Home Counties and coastal regions. I expect this trend to continue whilst the London market remains somewhat cooled due to lower amounts of foreign investment and a strong sterling exchange rate.
Given the market so far this year, we expect that the market below £1million will continue to see a shortage of stock as the number of properties available in the market place will reduce and, therefore, if you see something that suits you, you should pounce on it as quickly as possible.