It is with a small sense of relief that I offer you this link to EstateAgentToday.co.uk. It tells the story of the central London property market in 2016 a story of fast falling prices that we have been predicting for a little too long.
According to data consultancy Lonres, the average gap between hope and reality (asking price and selling price) on a prime central London house today is over £100,000. Look to Mayfair, Kensington and Knightsbridge and that number rises to £170,000. And for some it's rather worse than that: Jamie Oliver has reduced the price of his house in Primrose Hill by £2m to a mere £10m.
Overall, Savills expects prices to fall around 9% in London this year (after falls of 0.4% in 2104 and 3.3% last year). So what's going on? All the things we have been talking about.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The change in the buy-to-let tax rules is putting off investors who would be buying with a mortgage. The whopping stamp duty bills on high-priced property means that no one buys unless they are sure they are settling in for the long term. Note that Oliver's house at £10m would still stick the buyer with a £1.1m stamp duty bill: even in Knightsbridge that's going to pay your rent for a while.
The prices themselves were getting just too high (however cheap money gets, there is still a price at which the number of real buyers is too low to absorb all the stock above a certain price level). The rise in luxury new-build supply across London means that buyers have enough choice that they might as well bargain as they clearly are.
And finally there is Brexit and the uncertainty that brings to financial folk. It's a perfect storm for London sellers. It also isn't anywhere near over yet: there are currently 14,031 £1m-plus houses for sale in London, says buying agent Henry Pryor. Last month 297 sold. That's quite a supply overhang: expect further price falls.
-
House prices to crash? Your house may still be making you money, but not for much longerOpinion If you’re relying on your property to fund your pension, you may have to think again. But, says Merryn Somerset Webb, if house prices start to fall there may be a silver lining.
-
Prepare your portfolio for recessionOpinion A recession is looking increasingly likely. Add in a bear market and soaring inflation, and things are going to get very complicated for investors, says Merryn Somerset Webb.
-
Investing for income? Here are six investment trusts to buy nowOpinion For many savers and investors, income is getting hard to find. But it's not impossible to find, says Merryn Somerset Webb. Here, she picks six investment trusts that are currently yielding more than 4%.
-
Stories are great – but investors should stick to realityOpinion Everybody loves a story – and investors are no exception. But it’s easy to get carried away, says Merryn Somerset Webb, and forget the underlying truth of the market.
-
Everything is collapsing at once – here’s what to do about itOpinion Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect their wealth.
-
Value is starting to emerge in the marketsOpinion If you are looking for long-term value in the markets, some is beginning to emerge, says Merryn Somerset Webb. Indeed, you may soon be able to buy traditionally expensive growth stocks on the cheap, too.
-
ESG investing could end up being a classic mistakeOpinion ESG investing has been embraced with enormous speed and zeal. But think long and hard before buying in, says Merryn Somerset Webb.
-
UK house prices will fall – but not for a few yearsOpinion UK house prices look out of reach for many. But the truth is that British property is surprisingly affordable, says Merryn Somerset Webb. Prices will fall at some point – but not yet.
