The volume of transactions is concerning as the market slows down for the summer months, says the analysis report from W. A. Ellis.
It is probably due to buyers are adopting a 'wait and see' approach for political and economic reasons, said Richard Barber, partner at the estate agency.
‘We've seen a 25% reduction year on year in sales at all price ranges across our prime central London areas of Belgravia, Chelsea, Knightsbridge, South Kensington, Mayfair, and Kensington,’ he pointed out.
‘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,’ explained Barber.
The agency said that the proportion of sales under £2 million has also reduced, but only marginally from 67% to 62%. ‘However, when one looks at the actual number of sales, a more disturbing trend emerges, namely that only 115 flats have been sold in June 2014 beneath £2 million and perhaps the most frightening statistic of all is that only 27 houses were sold in June, whereas last year 49 were sold, a reduction (in transactional terms) of nearly 45%,’ said Barber.
‘The underlying factors are very apparent to close observers of the market; the combination of mansion tax threats, higher stamp duty, 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,’ he explained.
‘There are currently 374 houses for sale within our chosen areas and approximately 92% of them have a price tag in excess of £2 million so it is not entirely surprising that the transaction level is lower,’ he added.
He pointed out that arguably, there is also value to be found as many of these properties offer greater floor area, albeit spread over four to five floors, gardens, patios and better bedroom accommodation.
‘It is apparent, however, that the traditional buyer of these houses, buyers from northern Europe and the UK, are currently weighing up the situation both political and economic, and perhaps adopting a wait and see approach,’ Barber added.
‘What is clear is that keen vendors will need to adjust their expectations if they wish to find a buyer this summer. We have achieved 99% of our asking prices since January 2014 which underlines the importance of accurate and responsible pricing in a changing marketplace,’ he concluded.
