Prices in England and Wales, excluding Greater London, increased by 2.9% in August compared with the previous month to an average of £262,910, according to the latest index to be published.
However, on an annual basis there has been minimal growth of 2.1% but there has been a rise in sales, up 15.2% quarter on quarter but year on year transactions are down by 1.3%, according to the London Central Portfolio (LCP) index.
Overall, the wider market in England and Wales is currently proving to be more robust than that of Greater London and prime central London, with transactions falling but not at the same rate.
‘London has, without doubt, been more impacted by the introduction of successive residential taxes and levels of affordability,’ said Naomi Heaton, chief executive officer of LCP.
However, a slowing or possible fall of house price growth in England and Wales outside London, coupled with rising interest rates and general economic uncertainty may see transactions fall further and price growth stagnate.
Average prices in Greater London, excluding the prime central market, reached a high of £594,123, up 2.4% month on month and up 2.6% year on year. But sales in this sector have continued to slide and the report says this is due to the introduction of the additional rate stamp duty in April 2016.
Sales are down 6% year on year to 84,883, the lowest level since 2011. However, a significant increase in quarterly sales of 14.7%, suggests that this tax may finally be getting accepted by buyers, according to Heaton.
‘The performance of the London property market remains disappointing. This can be attributed to weak investor sentiment and a lack of affordable properties in the capital. Many house owners are also reluctant to move if they have seen the value of their property decline,’ she explained.
‘However, we are now seeing more experienced investors returning. Contra-cyclical dollar denominated investors are able to acquire assets at unusually large discounts. With a view to holding them for the medium to long term, they are no longer waiting to call the bottom of the market,’ she added.
Average prices in August, excluding new builds, in the prime central London market now stand at £1,781,090, up 1.5% year on year but sales are down 11.6% on an annual basis and down 42% compared with 2014.
These falls have been seen across the prime central London market, with new build transactions falling 16.3% across the year. New build prices remain at a high premium of 44.6% over existing stock and now stand at £2,863,621.
‘Transactions continue to remain stubbornly depressed at 3,771, a record low. It is the first time that annual transactions have remained below 4,000 for five consecutive months since records were first published. This continued slide is putting further pressure on sellers, estate agents and home builders alike. It is also likely to reduce tax revenues for the Treasury,’ Heaton pointed out.
‘There has been no action or initiative from the Government that gives any indication that this trend will change. The housing market appears to be the least of the Government’s worries with a potential No Deal Brexit on the horizon. Whilst uncertainty continues, it is bound to stifle homeowner and investor interest. However, a significant buying opportunity exists before positive sentiment returns and the market rallies,’ she added.
