There have been more signs of a slowdown in the housing market, with one of the most respected barometers from the Royal Institution of Chartered Surveyors expected to reveal this week that there has been a dip in the balance of members reporting house price rises.
The figures will come after new falls in prices were recorded by Halifax and following a warning earlier this month from Professor Paul Cheshire, who has advised the government on housing policy, that Britain was ‘due a house price correction’.
Home prices at the upper to high end of the capital have been particularly vulnerable ever since the now former chancellor George Osborne decided to reform stamp duty in December 2014, making the property acquisition tax more expensive for anyone acquiring property worth more than around £937,000.
Prices have dipped in and around central London by as much as 10% since their 2014 peak, and could fall further, with Professor Christian Hilber from the London School of Economics also predicting that a recession induced by Brexit could cause house prices to fall.
The market in well-heeled areas, like Hammersmith & Fulham, have been particularly affected by Brexit and high levels of stamp duty, with prices slowing following a period of rapid growth, which largely explains why more homes are being withdrawn from the market in and around the area, than are being sold.
Some 58% of properties taken off the market in central London so far this year were withdrawn rather than being sold, according to data from LonRes, a research firm.
“This gives you an idea of just how sluggish the market is,” said Marcus Dixon, head of research at LonRes.
But while the level of withdrawals is “an important barometer of the market”, according to Dixon, he also points out that a lack of forced sellers has not been accompanied by a sharp deterioration in the economy, unlike during the 2008-09 crash.
“The housing market has slowed considerably but not a huge amount of people are losing their jobs or finding themselves unable to pay their mortgages,” he said.
Despite the recent slowdown in the market, there remains plenty of demand from prospective buyers both in the UK and overseas, with many international purchasers, attracted to the weakened sterling against the dollar and the euro, continuing to view the market in Fulham and surrounding areas as a safe bet.
Buyers took out £348 million new mortgages to buy property in Fulham last year, according to new figures from Lendy, the peer to peer secured lending platform.
“Lenders have continued to pile into the owner-occupier market, and south London is still their favourite place to lend,” said Liam Brooke, co-founder of Lendy.
However, buyers have become intensely price-sensitive and pragmatic, and expect vendors to be more realistic about asking prices, or be prepared to negotiate, in order to achieve a sale.
The property tide may be turning in buyers’ favour now, but the growing lack of homes on the local market could very well reverse that trend in the medium term.
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