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.
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.