Sales of flats across London have collapsed 47% in just a year with first time buyers in particular waiting to see if pries come down, new research suggests.
It is a result of the London market being overvalued for at least three years with the number of sales falling from 4,709 in July 2016 to just 2,494 in July this year, according to the report from independent estate agents James Pendleton.
The research also shows that sale of other types of property also fell but not so severely. The number of detached properties sold fell 5% in 12 months to 143 in July this year, semi-detached sales were down 1% to 516 and sales of terraced houses down 8% to 1,476.
Over the same period sale prices of flats crept up 2%, terraces rose 3%, semis gained 13% and detached houses fell 5%. In the previous month, June 2017, sales of flats were 43% down on June 2016, potentially pointing to a market that is prone to a well-overdue correction in prices.
It comes despite latest figures revealing first time buyers in London borrowed 8% more in the second quarter of 2017 compared with the previous year and the report suggests this points to fewer first-time buyers at the bottom end of the market being able to transact at all, while those in a better financial position continued to buy further up the ladder with many taking advantage of the Help To Buy scheme.
Despite a persistent housing crisis in the capital, the firm believes that many first time buyers believe prices are simply too high and are unable or unwilling to meet such steep valuations even in a cheap lending environment.
‘This a classic sign that first time buyer demand is sensitive. There is a temptation to wait on the side lines while prices become more realistic. When that happens it can only be a good thing, because housing markets are most stable when transactions are healthy across the board,’ said Lucy Pendleton, director of James Pendleton,
‘A reality check is in the offing after such strong growth in London and the scale of this drop in sales of flats tells me it is now more likely to be inevitable. Solid numbers of people are showing some reluctance at current prices and signalling to all the other market participants they can’t transact unless they come back down,’ she added.
