Sales of new homes fall in London as buyers shun extra premium over existing homes
A significant premium for buying a new build home in London appears to be affecting the sales market with transactions falling, according to a new analysis.
Overall, house prices in England and Wales, excluding London, ended 2018 up 2.8% higher than the year before, the lowest level of growth in the residential property market since 2013, according to the latest housing analysis from London Central Portfolio.
Sales also fell, down by 3.7% year on year, the largest drop since 2008, but sales of new build were up by 3.6% even although prices were 14.8% higher than existing homes, but the picture in London is different.
Average prices in Greater London increased by just 1.3% and reached their lowest level since the financial crisis, the data also shows. Sales fell by 7.1%, the fourth year of decreasing transactions. New build sales were down by 19.1% and cost 20.8% more.
In the prime London property market the downturn was more significant with average prices down by 6%, with a fall of 10.2% in the final quarter of 2018 while sales were down by 16.4%, the lowest recorded and down over 46% on 2014.
The data also shows that in the new build market sales fell by 75.1% and in this sector prices are a significant 74.3% higher than the price of an existing home.
‘Whilst transaction levels have fallen ever since the introduction of Additional Rate Stamp Duty in 2016, undoubtedly the uncertainty around Brexit is having a far more punitive effect than increased buying costs, said Naomi Heaton, LCP chief executive.
‘With no positive news of late, coupled with the infighting within the parties and government, it is difficult to foresee any significant changes to current market sentiment. Unity and clarity would now go some way to restoring confidence not only to the property market but to all facets of UK enterprise,’ she explained.
‘The political turmoil the UK is currently weathering is being acutely felt throughout the country, but nowhere more so than in prime central London. With the Prime Minister’s deal being voted down and no clear cross party consensus, it appears we are now even further away from a post-Brexit road map. This continues to dampen investor sentiment,’ she pointed out.
‘However, from a buyer’s perspective this period of low competition and suppressed prices is an excellent opportunity. The fundamentals that underpin the desirability of prime central London as a global destination have not changed. Those who still believe in these fundamentals are able to acquire properties at material discounts, with the potential for significant uplift in the medium to long term,’ she added.