The volume of London sales transactions is at a record low ahead of June’s general election.
According to Portico’s analysis of HM Land Registry figures, only 55 transactions took place in the borough of Westminster during February 2017. As well as being 60% lower than the figure recorded in February 2009, this is the lowest number ever documented by Land Registry data.
As the research suggests that the low level of transactions is linked to the scheduled general election, Portico anticipates that the volume of sales will fall even further in the run-up to 8 June.
Past figures suggest that people have typically been pushed towards the outskirts of London when transaction levels in the centre have been low. However, the data from the estate agents indicates that the reduced sales are not confined to the centre, with falling figures rippling across the city.
In Wandsworth – a south London borough – just 105 transactions were recorded in February, dropping 72% from last year’s total of 370. A similar story was observed in east London borough, Redbridge, with February’s HM Land Registry data indicating that there were only 82 sales transactions. During February 2016, there were 260; a drop of 68%.
However, historical data indicates that post-election, the volume sales should increase. Three months after 2015’s election, the average growth in sales transactions was recorded at 34% in Redbridge, with Wandsworth and Westminster sales jumping by 28%. Portico’s research suggests that the market is likely to experience a similar surge in transactions volumes as certainty returns to the market.
Commenting on the research was Robert Nichols. The Managing Director of Portico highlighted the impact which the election could have upon London’s housing market, both pre and post result.
“Currently, transaction volumes – or the number of homes being bought and sold in the capital – are at an all-time low. The drop in transactions is in part explained by a big jump in sales in the run-up to April last year, when the change to stamp duty taxes came into effect, followed by an immediate fall. Since then, volumes have dropped to historic lows, and Theresa May’s decision for a snap general election will further subdue the market.
“We are expecting to see some improvement in volume post-election, but at best we expect volume to track at -5% year on year to summer 2016 when volumes failed to recover after the stamp duty changes.
“We cannot say for certain what impact a boost in market activity will have on property prices, but historically there has always been a slight increase. If we look at the last election, house prices rose by 2.4% in Wandsworth in the three months following the vote, 4.6% in Redbridge and 1.7% in Westminster. Similarly, in the election before that in 2010, property prices rose by 1.8% in Wandsworth, 2.5% in Redbridge and a staggering 19% in Westminster in the three months after the election.”
