Another London agent has warned that the market in the capital has fallen.
Richard Barber, partner at Knightsbridge-based W.A. Ellis, made his remarks following those of fellow agents Ed Mead and Peter Rollings.
Last week, Rollings, of Marsh & Parsons, called the top of the market, while Mead, of Douglas & Gordon, said that the market was not what people reading media headlines perceived it to be.
Yesterday Barber said: “Although there has been much talk of a housing bubble, a more cautious story is emerging in prime central London.
“It is the rate of transactions which is of most concern and a strong barometer of confidence within the upper end of the London market.
“In May 2013, 932 properties in total were sold throughout London. However, this May, there have only been 774 sales – almost a 17% reduction in transaction levels year on year.
“It is also interesting to note that 25% of the house stock currently available on the market has been reduced in price.
“Not only that, but year on year the average rate per sq ft achieved on houses is 1% down from £1,876 per sq ft in the first quarter of 2013 to £1,858 per sq ft in the first quarter of 2014.”
Barber said that the Government’s tax on properties held in company names and higher rates of Stamp Duty were to blame for the slowdown.
The speed with which market sentiment has shifted highlights the extent to which the London property market has been driven by speculation and expectation rather than underlying value.
Although having a high proportion of cash buyers in the capital may appear to provide a buffer against higher interest rates and tighter lending criteria, in a slowing or falling market it simply strengthens their hand to drive a harder bargain.
In short, reduced buyer confidence and the release of pent-up supply may well lead to the “bubble” popping with few levers available to the Government to stabilise London property prices without also affecting the wider economy.
While it may be tempting to blame Government, overseas buyers, agents or lenders for the bubble it has been the natural outcome of cheap credit needed to boost a fragile economy and a chronic supply/demand imbalance in the housing stock.
I find it concerning that the proposed solutions to avoid future bubbles focus overwhelmingly on building more homes. Development of homes on the Green Belt and similar supply-side proposals pass the buck for dealing with the problem to future generations of Londoners.
Instead politicians need to take a long-term view and to drive demand for homes to the UK’s other major cities by aggressively supporting their economic growth.
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I cant say we have experienced the same! Quite the opposite infact
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