There have been huge drops in the prime London market.
In the first quarter of this year, both prices and new instructions across prime London and its fringes dropped.
According to the estate agents network and data provider LonRes, prices were down 9.7% compared with a year ago, while new instructions were down 27%.
In prime central London – the most expensive postcodes in London, including Kensington and Chelsea – new instructions were down by 38% compared with the first quarter of last year.
However, demand appears to be rising, with just over half of agents replying to the latest LonRes survey reporting a rise in applicants.
One third of the agents (30%) also reported a rise in landlords selling investment properties.
Marcus Dixon, head of research at LonRes, said Brexit meant that many prospective buyers had chosen not to transact. Those who did choose to go ahead negotiated accordingly, meaning bigger discounts on asking prices.
LonRes does not report across the whole of Greater London, but across central London and its fringes, plus other ‘prime’ areas. It has over 6,000 subscribers and currently 17,800 properties available for sale plus 8,800 available to rent.
I don’t think this is to do with Brexit but rather a) a clamp down on some overseas investors cleaning their dodgy money through our system b) stupidly high stamp duty.
In the North East at the higher end of the market people aren’t selling because to buy another property means wasting £30,000 plus on stamp duty. Lots of people are remodeling their own homes instead.
‘It’s rare that you will find a layout to be exactly to your own liking. So to move would cost; sale costs, stamp duty and rebuild costs. You could be looking at £150,000 with no guarantee of ever recovering that outlay.
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This is NOTHING to do with Brexit. When will people wake up? Prices in London are totally unsustainable because they are unaffordable for almost all Londoners. They were sustained on a money-laundering / ‘dumb money’ foreign investment plurge. New rules have turned that tap off and now the market is having to fall back onto domestic demand. And guess what? At current prices there isn’t any! Potential buyers are also very sensibly now pricing in the Land Value Tax which will be introduced by the next Government. If it comes in around 3% (as is expected, and as in line with cities like New York), then a buyer of a £2 million pad needs to set aside £60k in cash for the LVT. That is quite a large additional expense, and people are rightly cautious about how many of the minted Baby Boomers will actually be able to afford it. If they all decide to “downsize”, as I expect, then the market is going to be absolutely flooded with overpriced (and currently underoccupied) large dwellings. Be careful out there …
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Agreed, Brexit is a wonderful excuse but masks the reality of an inflated marketplace that just isn’t sustainable.
In our Home Counties marketplace we are finding at the lower end Help To Buy is artificially raising prices of new builds (which, by the way, are worth 10% less three years later), but the incentives are squeezing the second-hand market prices for similar houses down.
That in turn means those upsizing from those properties have less to spend so what they want either has to reduce to secure a sale or remain unsold.
This problem runs up the line to the downsizer level, many of whom look at the price they would have to sell theirs for, the ROI from what they might put in the bank, the compromise they would have to make in terms of space and nicety by downsizing – and they stay put.
And who can blame them? If i’d worked fifty years to afford what i have now, and downsizing was full of compromises with not many incentives, would i move unless i had to? No.
Throw into the mix a reduced number of people leaving London to come out here, and those that are still doing so have less to spend, and the current market makes perfect sense. I just thank my lucky stars much of what we sell is old and peculiar, as they’re the places you buy with your heart not your head!
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You may well be right Flatnose. But change is coming. It is being reported on Twitter than Corbyn will introduce a top rate of tax of 70% and a one off tax of 20% on personal assets over £1million. May not be a big factor where you are, but good luck selling that £4 million flat in South Kensington in THAT scenario! Smart money in London is getting out while it still can. Labour have already said they will introduce capital controls, so you can’t leave it until the say after the Election. It will be too late then….
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