Prime London woe: price falls, slow sales and valuation mark-downs

Coutts bank has issued a starkly pessimistic snapshot of prime London’s housing landscape, reporting price falls, valuation mark-downs and slower sales in a market which it describes as “bumping along the bottom.”

First off it says prices have fallen three per cent in the first quarter of 2018, reversing a rise reported in the previous three months. “Prices appear to be bumping along the bottom of the market, 14 per cent below 2014 peak values” the bank reports. 

It predicts that for the rest of the year prices will remain flat “although volatility may come as the effects of Brexit become clear and the market continues to adapt to stamp duty land tax changes.”

No less than 53 per cent of prime property on the market is being sold below asking price, compared to 42 per cent last year and Coutts warns that prime property buyers can now expect to achieve 12.1 per cent off the asking price. Typically this means £155,000 off an average asking price in Wimbledon and £600,000 off a home in Mayfair or St James’s.

Next in the firing line come sales volumes.

These fell 19 per cent over the last quarter, are 24 per cent down compared to a year ago and almost 33 per cent below the 2013 figure.

“Low interest rates – and therefore mortgage rates – mean that for the time being sellers are able to ride out the storm and wait for conditions to improve. As a result, sellers are either withdrawing from the market or turning to the lettings market” says Coutts.

Meanwhile time on the market is rising.

“Sellers [are] requiring six months on average, acting as a break on sales volumes” says Coutts, although it reports a healthy volume of stock under offer across prime London markets - a 22 per cent increase compared to the previous quarter.

Buy to let in prime areas of the capital is also under attack, “feeling the effects of the increasingly unfavourable tax regime, low yields and limited capital growth prospects.” 

Coutts says this is most obvious in the sub-£2m market “where we have seen the most significant fall in transactions.”

Most concerning of all for the bank, it appears, is that it has identified 40 per cent of valuations marked down by surveyors in the last 12 months, with almost a fifth of these down-valued by 10 per cent or more.