Sales of flats across London have dropped 47% in just a year, according to a report from independent estate agents, James Pendleton.
The report indicates that, despite a continuing housing crisis in the capital, the drop could be down to first-time buyers waiting to see if prices come down.
The number of flat transactions has fallen from 4,709 in July 2016 to just 2,494 in July 2017, against claims that the London market is overvalued. At the same time, flat prices rose by 2%. The firm reports that many first-time buyers feel costs are simply too high and that they are unwilling or unable to meet such steep valuations, even with low interest rates.
While figures reveal that first-time buyers in London borrowed 8% more in the second quarter of 2017 compared with the previous year, the report suggests that this is down to those in a better financial position buying further up the ladder with support from the Help to Buy scheme. It also states that there are fewer first-time buyers at the bottom end of the market, with many unable to transact at all and asserts that the London market is overdue a correction in prices.
Lucy Pendleton, Director of James Pendleton said: “This a classic sign that first-time buyer demand is sensitive. There is a temptation to wait on the side lines while prices become more realistic. When that happens it can only be a good thing, because housing markets are most stable when transactions are healthy across the board.”
She added: “A reality check is in the offing after such strong growth in London and the scale of this drop in sales of flats tells me it is now more likely to be inevitable. Solid numbers of people are showing some reluctance at current prices and signalling to all the other market participants they can’t transact unless they come back down”.
The research shows that sales of other types of property also fell, but not as severely. The number of detached properties sold fell 5% over the past year, while the value of detached properties decreased by 5%. The number of semi-detached sales is down 1%, but semis rose in value by 13%. Sales of terraced houses are down 8%, but values are up by 3%.
