How to Value in a Low Volume Market


2007 was the year that you could sell secondary property for prime prices – the worst house in the best street, the biggest house in the noisiest road, the best house in the worst street, the development opportunity.

2008 market is “the best and the rest”, purchasers are still out there and will move fast and competitively pay for the best. Other properties are finding it hard even to arrange viewings. You need an experienced Valuer (experience, reputation etc) in this market not a marketing agent.


It’s quiet out there. So quiet that one could say it has seized – except for properties over £10m and there aren’t many of those! However for Mayfair, Wetherell has seen a surge of business for the super prime.

In the first 4 months of 2008, Wetherell’s data research shows that there have been 5 sales of “Mayfair Mansions” at record prices with total sales of nearly £120M and record values approaching £3,000 p.s.f.

Most of these houses were former offices or buildings that have reverted back to residential, continuing the trend of bringing residential life back to Mayfair.

South Street: A house that Wetherell sold in 1993 for £5.4M / £238 per square foot has just been sold for nearly £2,000 p.s.f. unmodernised with a 90 foot frontage and 22,700 square feet of accommodation.
Mount Row: A “tear down” low built house close to the Connaught with planning for a new 10,500 sq.ft. house sold on an asking price of £15M and nearly £1,500 p.s.f.
Park Street: Offices back to residential for this period house by the Grosvenor House hotel. £11.5M and nearly £1,500 p.s.f.


Recent press reports of closures of estate agency offices around the country are not surprising when you look at the volume of sales.

LAND REGISTRY VOLUME FIGURES FOR SALES IN ENGLAND AND WALES ’88 / ’90 / ’06 / ’07 (approximate figures)

In 1988 at the top of the last big boom, there were nearly 2 million property transactions.
In 1990 when we were in the depths of a recession and estate agents were going bust all over the country there was 1.1 million transactions.
In 2006 – which was regarded as a boom year – there were nearly 1.25 million transactions. Not many more than there were during the recession. The difference was that property values have risen, so that each transaction was worth more in terms of commission.
In 2007 there were fewer than one million transactions.
2008 Land Registry figures for London January show a -37% volume for £1.5-2M price bracket against 2007 with only 48 sales and -21% on volume of sales over £2M with 62 sales. (E & W shows 86 sales /26% for £1.5-2M and 94 sales /-11% for £2M+)

On these figures, it would be easy to argue that 2007 was the worst market for two decades and 2008 looks to be even harsher – but that is in volume terms. 2007 was regarded as a boom year because of the rise in values and 2008 will be a reasonable year for those agents transacting the business.

Still, it’s interesting to note that not many new estate agencies were launched – now you know the reason why!


As the heading announces, “How to Value” where there is no evidence of prices decreasing and little evidence of it increasing? A knowledgeable estate agent works on a balance of buyers and sellers, supply and demand. There might be less people looking but this is balanced by the fact that there are fewer properties for sale.


1988. From Wetherell’s data, in the 1988 boom there were something like 150 -185 properties on the market at any one time in Mayfair & St James’s – it’s hard to be precise, of course, because as it changed from month to month, but let’s consider 185 as the top of an activity index.
1990. In the recession of the 1990s that figure dropped to between 110-125.
2005 – 7. Boom time but volume for sale still around 120 -130
2008. Today (5/5/08) there are only 82 properties on the Mayfair market.

At this rate you could argue that there are too many estate agents even at the higher values!

Of these 82 properties there are currently only 9 under offer (a low of just under 10% of market) of which 2 are Wetherell (22% of those under offer, a great statistic but low volume)

Mayfair Sales

Q1 sales in 2007 for Mayfair totalled £97M (x 47 sales)
Q1 sales in 2008 for Mayfair totalled £47M (x 10 sales)

You could however spin this statistic by saying the average sale has more than doubled from £2.M in 07 to £4.7M in 08!


The economic uncertainties have in our opinion increased the demand for prime property – it might be expensive but it is a tangible asset, you can’t live in a money market maturity note – there is a flight to quality. Look at how gold has raced up from $300 to $1,000 an ounce. Look at Francis Bacon’s paintings selling for $40M.

London is not an international market anymore, it is now a global market; 5 years ago Sotheby’s clients with a spend of $500,000 +

2003 from 36 countries
2008 from 58 countries

What is interesting is that they don’t like to display their art in their own countries and that they can sit peacefully in a London home. China is now the 4th largest art market, London can look forward to them arriving onto the house purchase scene.

The market that was once multi-tiered now has only one level – the super prime of £5M+. Only super-prime properties are really selling. (Knight Frank: estimate that 60% of buyers over £4M are foreign buyers)


Wetherell are instructed on around 25% of the Mayfair & St James’s market (total value around £400M). However there is also an extra £100 million of property “off market” – properties that do not appear in any printed or electronic media, but are nevertheless available. These tend to be vendors who are selling for personal reasons not financial.


Still, you can hardly blame the owners of leasehold and freehold property in Mayfair for not selling. The credit crunch, the congestion charge and Alastair Darling’s ridiculous attack on non-doms may have created a climate of uncertainty – but the truth is that values in Mayfair & St James’s have risen steadily for a quarter of a century.

The owners know that. a Grosvenor Square flat sold for £200,000 twenty five years ago will fetch around £4 million today – there is no arguing with that, whatever the rest of the economy is doing.

And that’s despite:

Black Monday, October 19, 1987 – the second-largest one-day decline in stock market history. Wetherell sold a house in Culross Street for £425K which has just come to market at £5M (£1,750 p.s.f.)
Black Monday, January 21, 2008 – the biggest worldwide stock market crash since 9/11, followed by sub-prime debt write downs of $100 billion and still Wetherell sells two houses for £25M!

I mention this merely to emphasise two things:

We like to panic.
Somebody always makes a fortune out of our tendency to panic.


Recent Savills Research for overall growth in property values for prime central London grew by 16.3% in 2007 with an overall loss of 2% in the final quarter but their statistics for Mayfair indicate that property values rose by an incredible 57.7% in 2007 and by 4% in the last quarter.

Wetherell’s sales for 2007 substantiate this figure and are in some cases even greater.


So, volumes are down and we have no choice but to sit it out and wait to see where sentiment drives the economy. But what of the future?

The Nobel Laureate in Physics, Nils Bohr once said
“Prediction is very difficult, especially if it’s about the future”
Still, as another great man once said,
“There’s no sense in being pessimistic. It probably wouldn’t work anyway”

Wetherell predict that 2008 prices for Mayfair property will continue to rise as they catch up with Belgravia values. It is up to Vendor and Valuer to talk to the agents who are transacting the deals.