The agent who this week warned that the London market could be on the verge of collapse, with the rest of the UK set to follow, is standing by his words.
Robert Nichols, managing director of Portico, was speaking as this morning Nationwide said the pace of house price growth has slowed, growing 0.1% across the UK in the last month. According to Nationwide, the average house price is now £196,807. The Land Registry is reporting that across England and Wales, house prices are up by 5.6% in the last year and by 0.4%, saying that the average house price in October stood at £186,350.
Nichols said: “As agents, we turn over data every day and we can see what the figures are telling us.
“We are certainly not afraid to speak out. It is pointless to talk the market up when the data says otherwise.
“Across central London – Westminster – sales volumes have halved between May 2014 and now.
“When volumes reduce, house prices follow, and historically, we are close to the tipping point.
“We also know that historically, central London is the marker for the rest of the UK.”
Nichols said that affordability is the big issue: “Homes are quite simply too expensive.
“In Westminster prices have already plateaued and realistically the only way is down.”
Nichols said that the Autumn Statement, adding 3% Stamp Duty Land Tax to purchases of buy-to-let properties and second homes, could mean even lower supply of homes on the market, accelerating house price drops.
He said that in the crash that started in 2007, London house prices took 19 months to get to the bottom, and then a further three months before they started to rise again.
The central London market took a total of five years for prices to get back to where they had been; in the rest of the UK, the recovery time averaged eight years.
Nichols said he does not believe that the extra Stamp Duty burden will affect current landlords and their current portfolios. However, he does think that they will be discouraged from expanding their portfolios, and that new entrants to the market will be similarly deterred.
Of the impending tax changes on buy-to-let mortgages, Nichols said: “Landlords will just have to deal with it – they have no choice, because most of them are in the sector for the long term.”