Following a pick-up in toward the end of 2017, housing market activity in central London flattened out in 2018 with tax and Brexit having an impact, according to a new analysis.
Tax continues to stifle investment in central London property and Brexit negotiations, or lack of, remain at the forefront for investor, says the third quarter market update report from Winkworth.
It explains that potential buyers and sellers, and particularly investors, continue to hold off on their plans until political uncertainty has eased and there is a clearer idea of the post-Brexit market.
There is still movement, however, and properties priced correctly are selling well while the current market is being driven by ‘needs based’ buyers looking for value rather than investment.
As such, small to medium sized flats have dominated transactions not just in the past quarter, but over the year. A shortage of supply for good size family homes means they are being snapped up when they become available, but fewer of these are coming to market as a result of uncertainty.
Despite the slower market, the quality of homes coming to market has improved and this is reflected in the average price per square foot which has increased while actual asking prices have decreased.
Overall, although sentiment is very different to this time four years ago, it’s evident that there is still stability in the market and the firm expects it to remain much the same for some time until a clearer outlook for the UK is given.
The average price sold per square foot increased in the quarter by 6%, although average asking price and average sold price decreased by 2.1% and 2.2%, respectively and the report says that this demonstrates the better quality of stock coming to market, so although prices are slightly down, the quality of properties on the market is actually better.
Sales, however, remained static compared with both the previous quarter and the same quarter last year. They were almost 30% below the peak levels seen in 2014, before the stamp duty changes came into effect. Transactions for smaller properties dominated activity in the third quarter of 2018, with one and two bedroom homes accounting for 67% of all transactions.
‘We’re encouraged by the increased applicant levels we’ve seen over the past two quarters compared with the same period last year, which signal some underlying positivity in the market and shows that buying in central London remains a popular choice,’ said Dominic Agace, Winkworth chief executive.
‘It’s important to note, however, that despite this clear interest from buyers, this may not necessarily feed through to transaction or price changes further down the line as uncertainty and tax rules keep a lid on activity,’ he pointed out.
‘What has now become evident is the price disparities between similar properties on the market due to their varying characteristics. As such, it’s all the more important for sellers to seek a quality bespoke service from agents who have proven experience and longevity within this highly complex market, who can provide guidance based on years of knowledge and practice,’ he added.
