It is usual to see a bounce in the price of property coming to market at the beginning of the autumn, but this year the falls in the top-end boroughs of London have instead led to a large average price fall of -2.9%.
Miles Shipside, Rightmove director and housing market analyst comments: “As we enter the autumn selling season we usually see estate agents advising new-to-the-market sellers to push up their asking prices. While this is still the case in half of London’s boroughs, the other half have seen the price of newly-marketed property fall. This is especially prevalent in the most expensive boroughs where five out of the top six have seen monthly price falls as their market continues to re adjust. Because of their predominance of more expensive properties, they also have a disproportionate effect on the average , meaning that a slump at the top-end exaggerates the overall London price fall.”
The large monthly fall has pushed the annual rate well into negative territory, down to -3.2%. This is the largest year-on-year decrease so far this decade. In contrast to the market travails in the most expensive prime boroughs, the cheaper boroughs are rising year-on-year. The most expensive seven boroughs are all down year-on-year, while the cheapest 12 are all up.
One of the few ways that Londoners can fight back against constantly stretched affordability is to seek out the most affordable housing. Their focus on this unfortunately pushes up demand and consequently fuels upwards price pressure. The top five fastest increasing boroughs have seen annual rises in the range of 5% to 10% in the price of newly-marketed property . These boroughs have average prices between £300,000 and £660,000 , so while not affordable by national standards, they are still relatively cheap for London . Hackney and Southwark are among the cheapest Central London boroughs, and these two have seen year – on – year increases of 7.2% and 9.5 % respectively.
Between 2009 and 2015, the large majority of property buyers were cash buyers, although currently not so much. In the current market sales volumes in Prime Central London have dropped, and the market has softened to some degree. We are finding that most homeowners are not in any hurry to sell their properties, which has resulted in fewer listings available to buyers and fewer sales. In 2009 until 2015 the Central London market was inundated with investors looking to purchase property as a way to invest their money in a safe financial environment. However, since the introduction of the 3% surcharge on stamp duty paid by investors, along with the uncertainty as to how Brexit will impact London’s property market, investors have been standing on the side lines. We are beginning to see more and more investors venturing back into the market, but we are still a long way from the volumes we saw pre-referendum.
Our advice to all sellers in many locations across London that the current market requires sensible and realistic pricing. Pockets of high demand still exist but tend to be concentrated around specific streets, schools and transport hubs. Transaction volumes are increasing and properties priced realistically continue to sell well, but those looking to enter the market should speak to a local agent who really knows their patch in order to get an understanding of local activity and demand.