Prime central London sales down by a quarter, says top agency
Sales across all price ranges have fallen by a quarter in the year to June as investors from Northern Europe and the UK adopt a wait-and-see approach, says agency WA Ellis, while annual London price rises hit a record 20.1%, according to ONS figures
One leading agency warns that its sales are down in prime central London by a quarter since last year, as buyers adopt a wait-and-see attitude – just as annual price rises reach a record 20.1%, says the Office for National Statistics (ONS).
WA Ellis says there has been a 25% reduction in its annual sales across all price range in prime central London in the year to June, with buyers from Northern Europe and Asia weighing up the political and economic climate before committing themselves.
Richard Barber, partner at WA Ellis, says, “We’ve seen a 25% reduction year-on-year in sales at all price ranges across our prime central London area (Belgravia, Chelsea, Knightsbridge/South Kensington, Mayfair, and Kensington).
“For instance, in June 2014 only 185 properties were sold, compared to 249 properties in June 2013. It is the underlying reduction in the volume of transactions which is of most concern as we enter the traditionally slower summer quarter.”
Conflicting data from the Experian property index states that sales of UK property at more than £500,000 rose 30% in the second quarter of 2014 and was up 50.7% in London.
Mr Barber told OPP Connect that WA Ellis is still seeing a large proportion of Asian buyers, and that apart from the ‘wait and see’ approach, there’s also a lack of quality flats on the market for buyers, although there is a lot of house stock. The Experian data is too broad to comment on, as WA Ellis’ figures focus specifically on its own postcodes.
Jonathan Hudson, founder of leading West End estate agent, Hudsons Property, agrees that inquiries have slowed. He tells OPP Connect, “As we enter the summer, inquiries have slowed down and more stock has reached the market, meaning buyers can now take a more measured approach to home buying.”
WA Ellis currently has 374 houses listed in prime central London and 92% cost more than £2million “so it is not entirely surprising that the transaction level is lower. Arguably, there is also value to be found as many offer greater floor area (albeit spread over 4-5 floors), gardens/patios and better bedroom accommodation.”
Buyers, including those from Northern Europe and within the UK are adopting a ‘wait and see’ approach and sellers have to “adjust their expectations if they wish to find a buyer this summer”, says Richard Barber, partner at WA Ellis.
The proportion of sales under £2 million has fallen marginally from 67%-62% but total sales are down with just 115 flats having been sold in June 2014 beneath £2 million in the area and just 27 houses compared to 49 last year.
“The underlying factors are very apparent to close observers of the market; the combination of mansion tax threats, higher stamp duty, Annual Tax on Enveloped Dwellings (ATED) and the fear of a Labour government is having a cooling effect on the market in general, but is particularly swingeing within the family house market.”
WA Ellis says it has achieved 99% of its asking prices since January 2014, “which underlines the importance of accurate and responsible pricing in a changing marketplace.”
The latest Experian property index shows that the number of listed UK homes in the UK at more than £500,000 rose 30% in the second quarter of 2014, while those from £250,000-£500,000 rose 16% – the highest level for both since 2010.
Homes worth more than £250,000 made up 41% of the total listed compared to 37% last year. Listing volumes from April-June were up 9.6% on last year, led by the North East, which saw a 25.6% rise. The only area with falling numbers was the East, where listing fell 2.6%.
London saw its listings of homes valued at more than £500,000 boosted by more than half (50.7%), followed by the Outer Metropolitan and South West.
Jonathan Westley, Managing Director of Consumer Information Services at Experian UK and Ireland, says, “The growth in houses prices suggests that home owners may have made reasonable capital gains on their existing properties, especially as they seek to move up the property ladder.
“Our latest index shows that higher end properties now form a greater proportion of properties appearing for sale, implying it is now second or third time buyers, who are more active in the housing market. But, 59% of all properties across the UK were still valued at less than £250,000 so there are opportunities for those with smaller budgets.”
Meanwhile, UK house prices rose by an average of 10.5% in the year to May 2014, the highest figure for four years, official figures show.
The average price of a house across the UK is £262,000, up from 9.9% the previous month, with London topping the rises at a record 20.1% year-on-year, according to the ONS.
Outside London and the South East, prices rose by 6.4% and were up in every region, apart from Northern Ireland, where they fell 0.7%.
Jonathan Samuels, the chief executive of Dragonfly Property Finance, told BBC news website, “Annual house price growth of 20.1% is borderline insane, but there are signs that the capital started to cool slightly in June and July.
“Things certainly have to calm down in the capital. Thirty-three 33.7% higher than the pre-financial crisis peak is mind-boggling.”
Jonathan Hudson adds, “These figures are not surprising but we predict that this figure will drop over the coming months, as a more stable London property market has emerged.
“The new measures put in place by the government and Bank of England, like overseas buyers’ CGT, tougher mortgage lending criteria and the mooted interest rates rise, will help stabilise the London market but not destroy it, as there are still a large amount of international buyers looking to invest in the relatively safe London property market.
“I welcome these measures as we don’t want to find the market blowing up in homeowners’ faces, but small incremental increases is something we expect to see over the next 12 months.”
By Adrian Bishop, Editor, OPP Connect