London kitchens – a thing of the past?

Kitchens are shrinking dramatically in size and prominence in new London homes and conversions, according to the latest research from estate agents Marsh & Parsons.

Falling victim to the changing eating habits of modern-day Londoners, kitchens now account for a smaller proportion of the total living space in new build developments and conversions in the capital than ever before.  Today’s London residents are eating out more – up to an average of four times a week in 2013.  This fuelled a boom in the London dining scene last year, with a new restaurant opening for every day of the month at its peak.

Only half of a typical Londoner’s total weekly lunches and dinners are now prepared in kitchens at home.  And as the average size of UK new builds gets smaller, it is the kitchen which is bearing the main brunt of this fall in square footage.

  • Example 1: A two bedroom flat in a Barnes development comes with a kitchen of 6.5 sqm (or 70 sq ft). This is merely 7.9% of the gross internal area of the apartment and roughly half the size of an average car parking space.

http://www.marshandparsons.co.uk/property-for-sale/2-bedroom-Flat-for-sale/Wrenn-House-Brasenose-Drive-London-SW13/BAR130164

  • Example 2: The kitchen is equal to only 7.3% of the property’s entire internal area in a two bedroom, two bathroom Albert Embankment apartment in Prime Central London.  At just 6 sqm (65 sq ft), this shows kitchen size has shrunk by a third since the 1960s, when the average British kitchen in a post-war new build was 8.8 sqm (95 sq ft).

http://www.marshandparsons.co.uk/property-for-sale/2-bedroom-Flat-for-sale/Albert-Embankment-London-SE1/PIM120096

As a result, over a third of residents in new build developments report they don’t have enough space for everyday kitchen appliances such as toasters or microwaves, or to invite guests over for dinner in their home.

Charles Holland, Lead Director of Residential Developments and Investments at Marsh & Parsons, comments: “The whole way we socialise as a city is changing, and marginalising the kitchen as the traditional hub of the home. Aware of the changing lifestyle of our capital’s young professionals, developers of the latest London apartment blocks are prioritising living space, bathrooms and nearly all else over kitchen size.

“Londoners today are increasingly following in the footsteps of New Yorkers, preferring to eat out and meet friends in a restaurant than host dinner parties. As such, kitchen size is no longer as important to many young professional buyers, and is often at the bottom of the pile in property wish lists”.

Marsh and Parsons have identified that among new build properties coming onto the market, separate kitchens are increasingly rare – with open plan kitchen-diners generally the norm.

  • Example 1: A two bedroom flat in a renovation of a former Victorian hospital in Clapham provides only one large open plan reception space to act as combined kitchen, dining and living area.

http://www.marshandparsons.co.uk/new-home-for-sale/2-bedroom-Flat-for-sale/Jeffreys-Road-London-SW4/RDI130042

  • Example 2: A one bedroom apartment in a modern riverside development in Pimlico incorporates a modest galley style kitchen into a single reception room.

http://www.marshandparsons.co.uk/property-for-sale/1-bedroom-Flat-for-sale/Eagle-Wharf-138-Grosvenor-Road-London-SW1V/PIM130001

Peter Rollings, CEO of Marsh & Parsons, comments: “With less and less time spent preparing meals in the home, we are starting to see the kitchen completely disappear as a room in its own right, and instead being subsumed into the wider living and dining space.  Once a means of space-saving in tiny apartment blocks, combined kitchen-diners are now necessary for many house-hunters, and much more practical than a separate kitchen.  Looking to the future, it begs the question whether the London kitchen is about to do a disappearing act on us altogether, or whether it has already ceased to exist as a must-have space?” 

 

News Headlines: Wednesday 15th January

Economics

Yesterday saw the announcement that inflation fell to the government target level of 2% in the last month, for the first time in four years. Inflation came in 0.1% lower than in November 2013, helped by the falling cost of recreational goods and services. But slower inflation was partially offset by an increase in motor fuel process, according to the ONS. (Guardian p.20 Metro p.46)

Personal Finance

Research from housing charity Shelter reveals tens of thousands of people are taking out payday loans to cover their mortgages and rent, with one in 50 using high interest credit in the past year. The charity warned that in total, one in five have use overdrafts, credit cards or cash borrowed from family and friends in order to pay for housing in the last 12 months. Shelter surveyed homeowners on their financial worries, and also discovered that a quarter of people would feel too ashamed to get help with housing repayments. The charity also revealed a 30% increase in calls to its helpline over the past year. (Metro p.4)

Property

Released in tandem with the ONS inflation statistics yesterday, the latest house price index from the ONS showed the price of the average UK house rose 5.4% to £248,000 in the 12 months to November. In London, the price rise was more than double that, with the capital seeing a year-on-year increase of 11.6%.

The Metro reacted to this news by heralding housing misery for first-time buyers, with the average first time buyer forced to pay £187,000 – or 6% more than a year ago. Peter Rollings of Marsh & Parsons said: “House price growth has washed over every corner of the UK” but in the Daily Telegraph, Richard Sexton of e.surv warned: “We desperately need more construction in order to prevent the bottom of the market being priced out entirely.” (Daily Telegraph B4, Metro p.47, Daily Express p.28, Guardian p.21, The Sun p.38, The Times p.35)

The Independent Editorial lead with a sceptical view of the ONS figures, arguing that expensive housing distorts the UK economy: “House-builders find themselves in the spotlight. Housing completions have been abysmally low for decades. And whatever David Cameron says, it is difficult to see the Government’s Help to Buy mortgage subsidies boosting supply sufficiently to keep house prices anchored. That is dangerous.” It argued that ultimately, even middle-class homeowners could ‘lose out’ from rising prices (Independent p.2)

Recruitment/Education

‘Skinflint’ bosses who fail to pay workers the minimum wage will face penalties of up to £20,000 from next month say the government – a £15,000 increase on current fines. Business Secretary Vince Cable also said that ministers had made it easier to ‘name and shame’ bosses paying under the minimum wage, and that all calls to the free pay and work rights help line would be investigated. (Metro p.47)

Paper Summary: 18th December 2013

Property
A new record 400,000 property owners are now property millionaires, that’s translates as twice as many as five years ago according to Zoopla. The number of homes worth £1 million or more has increased by a third over the past twelve months, thanks to soaring house prices in London and South East. The lack of supply of new homes in the capital was to a great extent responsible for driving forward a further 57,120 over the £1 million mark which equates to 156 new property millionaires a day in the capital throughout 2013, as shown by Zoopla. Prices are still rising according to the latest ONS figures, by 5.5% in the past 12 months, and the rise is even higher in London, jumping by 12%. Marsh & Parsons highlighted that prices are at more than double the rate of other areas , while Prime London continues to be a honeypot for UK and overseas buyers, as demand remains intense. As a result, LSL highlights that first time buyers are still having to leap higher than ever before to join the property ladder.

Personal Finance
Over half of UK shoppers are heading to discount shops, visiting an Aldi or Lidl figures revealed, for the first time ever. More than 13 million used the budget stores in the past three month, up from 46.1% a year ago. As a result all of the big four grocers have lost market share, as the so-called budget shops now make up a combined seven per cent of the total market. Credit crunch bargains are proving attractive across the country, as value continues to be a great incentive. Although Lidl and Aldi may not be as prevalent in London, more common in regions where shoppers can drive to do a food shop, this is likely to change, as more shops are expected to open next year. The type of customers are also said to be changing – those known as ABC1s (the traditional middle classes) make up just 25% of shoppers in 2011. Last year that rose to 41%, proving that Aldi is no longer the store of the cash strapped student.

Economy
Britons believe that securing growth as their top economic priority is more significant than higher wages according to a survey for the Independent. The ComRes survey findings suggest that the Conservatives message on the economy may resonate more than Labour’s campaign on reducing the cost of living. Their competing messages will lead to a fierce battle in the run up to the 2015 election. It’s interesting to note that in a list of important priorities over the next five years from a range of options, at the top was ensuring the economy continues to grow, followed by ensuring wages increase faster than prices, thirdly keeping inflation down and finally reducing the deficit. Now that the economy is growing the Tories will take comfort in the fact that that the findings show people view growth as the top factor.

Recruitment
More than half of the UK is said to be ripe for fracking according to a new Government report by engineering giant Amec, that shows a shale gas boom could create up to 32,000 new jobs. These plans have been met with mixed responses with some arguing it will cast a dark shadow over many communities in Britain who could now face the threat of fracking in their backyard. A new licensing round to enable firms to search for shale gas will begin in the summer. There could be between 14 and 51 vehicle movements to a fracking site each day over a 32 to 145-week period which could have a serious impact on traffic congestion, noise or air quality, depending on existing roads, traffic and air quality.

Marsh & Parsons

2014 FORECAST: LONDON TO SEE HOUSE PRICES RISE BY 5-7%

  • London prices expected to stabilize in 2014 with annual growth of  5-7%
  • Prime London will continue to be a magnet for overseas buyers
  • Business confidence to boost the corporate lettings sectorImage

House Prices

London property prices will continue to dwarf those in the rest of the UK in 2014, but the rate of growth is expected to stabilize, according to estate agent Marsh & Parsons.

They forecast that Prime London house prices will rise by 5-7% in 2014, compared to 10.3% in the last twelve months[1], with the majority of growth expected to take place in the first half of the year.

Peter Rollings, CEO of Marsh & Parsons, comments: “London’s housing market saw a substantial uplift in 2013, and we expect a similarly strong start in 2014 to drive an annual rise in prices – but these won’t be as spectacular as last year. With ongoing support from Government initiatives, the rate of growth will remain sustainable.

“Following improvements in unemployment levels, we’re likely to see modest increases in interest rates next year. But with a general election coming up in 2015, any changes are unlikely to create shockwaves through the housing market.”

Supply and Demand

A lack of supply being met with high demand will continue to drive price increases in the Prime London property market. At the end of 2013, there were 18 registered buyers per available property, compared to 13.5 at the end of 2012[2], and this will ratio will remain high in 2014.

Peter Rollings continues: “Many sellers will remain cautious of putting their property on the market as they are not confident that they will be able to find somewhere to move to, therefore supply is unlikely to improve considerably next year.  As a result, property will continue to sell for close to or at the asking price and we may see our average success rate of 98% of the sale price currently being achieved in Prime London increase even further.[3]

 

Overseas Buyers

Changes in policy announced in George Osborne’s Autumn Statement mean that foreign property owners who sell second homes in the UK will have to pay Capital Gains Tax from April 2015.  But with overseas buyers and foreign nationalities making up just 28% of all Prime London purchases in Q3 2013[4], this change in policy is unlikely to have any dramatic effect on prices in 2014.

Peter Rollings continues: “With the change only being introduced in April 2015, we may find a short-term rush for tax-free sales before the policy comes into effect, helping to boost supply and fluidity at the highest level. However, even with yet more tinkering from the Chancellor, London remains a more attractive and easier place to buy property than many other cities around the world, and providing that the politicians don’t ‘kill the golden goose’, demand for the best properties will remain fierce.”

 

The Rental Market

Based on current trends, Marsh & Parsons expects rents in Prime London to hold steady in 2014, with rises of 2-4% in 2014, as opposed to the generally static rent levels recorded in 2013.

Peter Rollings continues: “The improved economic mood has eased anxiety among city firms and as a result, the corporate lettings sector will flourish next year. Based on current trends, we expect the greatest rental increases to be found in two-bedroom properties in central areas such as Kensington & Chelsea, which are popular locations for visitors from abroad. As competition heats up, void periods will continue to fall, and 2014 tenants will face intense competition for the best properties.”


[1] Annual price in Q3 2013 in Prime London, according to Marsh & Parsons’ latest London Property Monitor

[2] Data from Marsh & Parsons’ London Property Monitor

[3] Marsh & Parsons’ sales data

[4] Marsh & Parsons London Property Monitor, Q3 2013

Value of one-bedroom properties in Prime London rises by over £60,000 in a year

Image 

  • One-bedroom properties in Prime London have appreciated by 6% in the last quarter, and by 14% in the last year
  • One-bedroom properties are very popular with first-time buyers and buy-to-let investors, spurred on by low interest rates and Help to Buy
  • Prime London property overall has risen by 1.6% in the past quarter, 10.3% in the past year

 The average value of one-bedroom properties in Prime London has risen by over £60,000 in the past year, following a 14% annual growth, according to estate agent Marsh & Parsons’ latest London Property Monitor.

The bulk of this increase was gained in the last three months, after a strong 6% quarterly rise increased the average value of one-bedroom properties by an extra £29,140. This follows three strong quarters of growth in the past year, contributing to a 14% annual growth – equivalent to £62,063 in a year.

The average price of a one-bedroom property in Prime London now stands at £502,139. In Prime Central London, covering the most expensive areas of Chelsea, Kensington, Notting Hill, Holland Park and Pimlico, the average value of a one-bedroom property has risen to £583,036 – a 9% increase in the last year, equivalent to £48,703 in a year.

Peter Rollings, CEO of Marsh & Parsons, comments: “With returns like these, it’s no surprise that people are queuing up to buy Prime London property. Competition for one-bedroom properties in particular is fierce. Spurred on by the rapidly improved availability of mortgages and low interest rates, first-time buyers are flooding the market in competition for the best properties in this price bracket.

“In addition, one-bedroom properties generate the best rental yields, making them a popular purchase for buy-to-let investors. We have noticed many young, would-be buyers adopting more European attitudes to renting, with many choosing to become long-term renters, rather than saving up for a deposit. As a result, the value of one-bedroom properties in Prime London is shooting up the scale.”

One-bedroom properties have risen in value at a faster rate than properties of other sizes in Prime London. The overall rate of growth in Prime London, reflecting all sizes of property combined, was 1.6% in the past quarter and 10.3% in the past year.

By comparison, two-bedroom properties have appreciated by 10% in the last year in Prime London, and by 7% in Prime Central London. Three-bedroom properties have appreciated by 12% in the last year on average across both Prime and Prime Central London.

Property Type Breakdown

   

Prime Central London

Non-Central Prime London

All Prime London

1 Bed

 £     583,036

 £        429,756

 £        502,139

2 Bed

 £  1,302,125

 £        615,495

 £        895,770

3 Bed

 £  2,298,161

 £        923,559

 £     1,523,116

4 Bed

 £  2,925,556

 £     1,364,599

 £     1,976,985

Strong price growth continues

In Prime London as a whole, property values have continued to rise, with prices climbing by 10.3% in the past year and by 1.6% in the last quarter.

However, for the first time in five quarters, the more expensive areas of Prime Central London have outpaced Prime London as a whole by experiencing a higher quarterly rate of growth. The rate of growth in Prime London was 1.6% in Q3, while in Prime Central London this figure was 1.7%.

Prime London Property Price Movements

 

Average value

Quarterly Change

Annual Change

Prime London

£ 1,426,243

1.6%

10.3%

Prime Central London

£ 2,040,387

1.7%

8.2%

Supply and Demand

The number of registered buyers has increased by 6% in the last quarter, but for the first time this year, there has also been an increase in the supply of property to the market. While the volume of supply remains at a historic low – there are still 17% fewer properties on the market than at the same time last year – the ratio of supply to demand is beginning to stabilise.

Peter Rollings continued:The ratio of supply and demand is the key factor which determines prices on the London property market. While interest rates remain low, Prime London property will continue to be seen as an attractive investment opportunity for both UK and overseas buyers, and prices will remain high.

“However, rather than create a bubble, we may find that Help to Buy actually stabilises prices by encouraging first-time sellers to put their properties on the market and take their next step up the property ladder. For the past three quarters, a lack of available property has created a high premium for those on the market, but the gradual increase in supply, which we are beginning to see now, combined with the wide volume of property development taking place, may start to initiate more ‘normal’ market conditions.”

Paper Summary: Friday 30th August 2013

Economics

  • The revised forecasts by the British Chambers of Commerce are another sign of growing confidence.  But, writing in the Daily Express, Peter Cunliffe says its head John Longworth is right to warn against false dawns.  The Middle East Crisis struggling eurozone and Chinese slowdown could hamper progress.  “That is why it is vital the Government and the Bank of England create domestic conditions in which business can thrive.”

Personal Finance

  • The Co-op has warned its banking business will go bust if bondholders don’t support its £1.5bn recapitalisation plan.  Last night The Evening Standard’s Nick Goodway was happy to leave the blame at previous management’s door in his comment on the story – as is the Daily Telegraph’s business leader piece.  But writing in the Daily Mail, Alex Brummer says it is not good enough for the new management team to simply kick the past into the long grass.  He says auditors KPMG were “asleep at the wheel”.  The Guardian’s Nils Pratley says members were complacent and also takes a pop at the FSA.  What’s the answer?  Goodway thinks the best bet, given the benefit of hindsight provided by RBS, would be to transfer the bad bank to UK Asset Resolution, which is already winding down the bad bits of Northern Rock and Bradford & Bingley, as soon as possible.  The Times’ Ian King thinks the same – hand the keys over to UK Asset Resolution and save everyone a great deal of trouble.  CityAM says the group is right to hang onto its best assets while Brummer says Co-op, banking regulators and the Department for Business should try and claw back money from Peter Marks and former Britannia boss Neville Richardson.  Pratley says bondholders should argue for as large an ownership slice as possible of the re-capitalised bank (49%?) – in the end bondholders don’t have much choice but to hold their nose and back the management’s plan.  Peter Cunliffe is sure of one thing – “taxpayers cannot be expected to step in again”.

Recruitment & Employment

  • The Daily Mail reports that the cost of a room in a care home has rocketed by 9.3 per cent in two years.  In the last year alone the cost rose by 3.5 per cent, a survey of 165 private care homes found.  The average cost of a room is more than double the average pensioner income of £13,799 and the gap ‘continues to increase’, the survey said.  Prestige Nursing+Care, which provides temporary staff for nursing and care roles and carried out the survey, said that since 2012 the average annual cost of a single room in a residential care home has risen by £963.  The Daily Express meanwhile concentrates on the absolute numbers from the same report saying pensioners face a bill of almost £30,000 a year if they need to go into residential care.

Property

  • The Metro’s property section runs a brace of pieces on a new development within walking distance of the medieval town of Saffron Walden, The Avenue.  This is a development within mature tree-lined avenues and landscaped gardens.  Developer Hill Residential is helping to sell a mix of properties to appeal to all buyers, from first-timers to families and downsizers; CEO Andy Hill and says the properties are suitable for buyers considering relocating from London.  That may be a smart move – The Guardian’s House Price Blog quotes estate agent Marsh & Parsons, who say rising property prices mean that the cost of a two-bedroom home in the richest borough in London is set to break through the £1m-mark in early 2014.  The agent said the price of these properties had risen by 14% over the past year to reach £909,203.  With an average of 18 buyers chasing every property, it said prices were set to continue to rise.  If the £1m mark seems out of reach, The Metro also looks at Gun Place, EC1 – a “bargain buy” – a one bedroom flat in a converted warehouse off Wapping High Street.  That’s on sale for £400,000 with Cluttons.

MARSH & PARSONS:

Average Price of Two Bedroom Property in Prime London could reach £1 million by early 2014

  • Two-bedroom properties in Prime London grew in value by 14% over the last year
  • There is currently an average of 18 buyers per property across Prime London as a whole
  • Two-bedroom properties are highly desirable for both young professionals and investors alike

The average price of a two-bedroom property in Prime London could reach £1 million by March 2014 if prices continue to increase at the current rate, according to research from estate agent Marsh & Parsons.

Two-bedroom properties in Prime London appreciated by 14% during the last year, to reach a current average value of £909,203, according to Marsh & Parsons’ latest research.

If this rate of growth continues for the next three quarters, the average price of a two-bedroom property in Prime London will be £975,843 by the end of 2013 and £1,010,974 by the end of the first quarter of 2014.

Two-bedroom properties experienced a much faster rate of growth than other types of properties in the three months to June 2013, with a 6% increase from the previous quarter.  The slowest quarterly growth was among four-bedroom properties, the average price of which appreciated by a relatively modest 3% during the last quarter.

Peter Rollings, CEO of Marsh & Parsons comments:Compared to the rest of the country, Prime London property prices may seem high, but the figures don’t tell the whole story. There is of course a huge variation between different areas in Prime London. Very high value and high demand areas such as Kensington & Chelsea lift up the overall average figures, but there are still many areas of Prime London which represent better value for money. As a result, we’re seeing many young couples and first-time buyers heading to parts of South and South West London in search of more space for their money.

“In addition, the dramatic price increases we’ve seen in the last year bear witness to the rapidly improved availability of mortgages and wider signs of economic recovery which have helped to clear the bottleneck of those who were waiting for the right time to purchase property. But over the coming year, we expect the rate of growth to stabilise in most areas as the Prime London property market returns to normal.”

Marsh & Parsons calculated the average price using the mean average value of all the two-bedroom properties in a mix-adjusted, representative basket of properties across the areas of Chelsea, Kensington, Notting Hill, Holland Park, Pimlico, Clapham, Balham, Battersea, Barnes, Pimlico, Little Venice and Brook Green.

In Prime Central London – including just the areas of Chelsea, Kensington, Notting Hill, Holland Park and Pimlico – the average price of property has already passed the £2 million mark.

An imbalance of supply and demand is contributing to higher prices. During the last quarter, 11% more buyers entered the market in competition for 14% fewer properties. A total of 18 buyers per property were recorded.

The shortage of housing stock on the market has also resulted in demand for property rippling out from the centre. As a result, property prices in less central areas such as Clapham, Balham and Battersea are also increasing rapidly. In Q4 2012, an average two-bedroom property in Prime Central London cost 48% more than the average two-bedroom property in Prime London as a whole. In Q1 2013 this discrepancy narrowed to 45% and in the last quarter the gap closed to just 40%.