Pre-Christmas discounts mean now is the time to buy a house in London
December 2021 - The Sunday Times
While the property market across the country has boomed since the start of the pandemic, there are homes in central London that have languished unsold for months with sellers forced to reduce their prices. Now vendors are offering pre-Christmas discounts, and central London has never looked such good value.
“We are absolutely seeing a swathe of price reductions now. It’s a last-ditch attempt by selling agents and vendors to secure a purchaser and exchange contracts by Christmas. As we know, after Christmas is a bit of a lull and the market doesn’t really tend to get going until after February half-term,” says Ashley Wilsdon, head of London buying for Middleton Advisors.
Asking prices have fallen most in Islington (4.4 per cent), Southwark (4.1 per cent), Haringey (3.1 percent) and slightly (0.1 per cent) in Ealing, Camden, Hackney, Lewisham, Hammersmith and Fulham, according to Rightmove.
Data released this week by the Office for National Statistics (ONS) shows that the average sold price in London fell by 2.9 per cent, or £15,112, to £507,253 in September, with prices falling in 13 of the capital’s 34 boroughs. The largest falls were in Westminster (down £50,959/5 per cent), Tower Hamlets (down £25,724/5.5 per cent) and Camden (down £25,623/2.8 per cent).
Even small percentage changes have large consequences in some prime areas of London. In Kensington and Chelsea, sold prices have fallen by 0.7 per cent in the past month — the equivalent of £10,268.
Despite the falls in some areas, mainly central, the average cost of a home in London has risen by an average 2.8 per cent in the past year, the lowest annual regional growth in the country — prices are up 11.8 per cent across the UK. Yet it is the latter that has captured the headlines as prices in the North West (16.8 per cent), Wales (15.4 per cent), East Midlands (14.7 per cent) and Scotland (12.3 per cent) have outstripped those in the capital.
Chloe Leefe, a director at the buying agency Aykroyd & Co, says: “Some vendors in London read in the papers that prices have risen by 10-20 per cent and they try to take a punt on what they can ask, with pricing driven by ego, and they then find they can’t command prices at that level.”
Many too were spurred on by the stamp duty cut, with prices in the capital falling 3.7 per cent in the weeks following the reduction in the relief at the end of June.
It is all a far cry from January 2020 when the property market was at the height of the so-called Boris Bounce; house prices were rebounding off the back of the Conservatives’ general election win and the country was coming to terms with Brexit.
It was in this climate that the owners of a newly refurbished three-bedroom terraced house just south of Hyde Park put their home on the market for £8.15 million. Fast forward to July, the pandemic had hit, we had emerged from the first of several lockdowns, and the price was reduced to £7.95 million. Yet the move from city to country had begun and the house on Montpelier Terrace sat on the property portals.
By May of this year it was clear that further action was needed. With the best of the stamp duty holiday over and the rush to leave town continuing, the price was reduced to £7.25 million. Finally in October, when the stamp duty holiday had finally tapered off, the price was lowered to £6.85 million — a saving of £1.3 million, or 16 per cent, off the original price — in what could be a final bid to sell before Christmas.
Meanwhile, a plush three-bedroom apartment on Harrington Road, South Kensington, went on the market for £10 million in September 2019 and is now £7.95 million, having had the price reduced three times over the past year. A newly furbished seven-bedroom terraced house on Neville Street, Chelsea, first listed in April for £7.95 million, is now on Rightmove for £6.95 million.
Central London was hit hardest during the first year of the pandemic as international investors stayed away and families moved out to the suburbs and beyond. In the year to March, while homes in leafy neighbourhoods like Merton and Richmond gained tens of thousands of pounds in value, some in more urban districts like Hackney, Kensington and Chelsea, and Westminster plummeted. The average property price in the City of London dropped by £127,000 in the year to March, according to the ONS.
The market is starting to recover though, despite an interest rate rise on the horizon. Data analyst LonRes reports that the average discount off initial asking price is now 7.2 per cent, down from 10.8 per cent in March, with sold prices up 3 per cent in prime central London.
Marcus Dixon, head of research at LonRes, says: “For overseas buyers with big budgets, prime central London has long been the go-to destination. Yet with the pandemic limiting opportunities to travel, many potential buyers stayed away. Domestic buyers with money to spend have tended to favour houses in the inner suburbs over flats in prime central.
“But with travel restrictions easing, international buyers are back. Prices are up, and flats (up 2.8 per cent) marginally pipped houses (up 2.3 per cent) to record the highest annual growth over the past three months. Big spenders are back too, with sales over £5 million up 24 per cent in the three months to October compared with the same period a year ago.”
Estate agents are confident that it is the start of a tear for the market. Frances Clacy, associate director in the residential research team at Savills, says: “After seven years of falling values, totalling 20 per cent, property in prime central London is overdue a recovery.
“The prime central London residential market is expected to experience the strongest house price growth across all UK markets over the next five years, as the return of affluent domestic and international buyers to the city gathers momentum. We are forecasting 8 per cent price growth in 2022, and 23.9 per cent growth in the five years to 2026. This five-year growth figure would see prime central London values return to their previous 2014 peak for the first time.”
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