Going down - prime London at risk of another 5% price fall

Strutt & Parker has repeated its warning that the market in prime central London could see a typical house price fall of 5.0 per cent this year.

In the latest research released by the agency and economic consultancy Volterra it says sentiment across the whole UK remains “very cautious” and that its national and London market forecasts remain unchanged from those first delivered just before Christmas.

It is forecasting 2.5 per cent UK house price growth in 2018 and in 2019, reaching 18 per cent cumulatively between 2018 and 2022. 

However the figure in prime central London is set to be significantly lower, between a drop of 5.0 per cent and zero per cent in 2018, but with cumulative price growth over the next five years forecast to be positive at 23 per cent - albeit “with a downside risk of zero per cent” according to the agency’s latest report released this week.

Guy Robinson, head of residential gency at Strutt & Parker, says: “In a climate of fast property price growth and low stamp duty, the cost of moving previously seemed relatively inconsequential, but now, with higher stamp duty and lower house price growth, moving costs are extremely material in the whole event, and has had an impact. 

“People have come to terms with Brexit, and sellers should be preparing to act on plans put back from last year. As we move into summer, we are hopeful that a lift in confidence will see an increase in supply to meet current buyer demand.”

Strutts says that total transaction levels for England and Wales look to be relatively similar to this time last year; however, in Prime Central London, despite transactions picking up over the course of 2017, they are now below what they were last year and are very low by historic standards.

“Whilst some buyers may have been driven to look at investments in other sectors and abroad over the last few years, the impact of stamp duty and taxation as a whole on PCL sales appears to have been absorbed by a reduction in asking prices” according to Charlie Willis, head of London residential agency at Strutt & Parker.

“While fewer properties are transacting than before, there has been a recent increase in competitive and sealed bids; and early signs that transaction levels and buyer confidence are rising. Buyers realise there will be more competition in the market the closer we get to a resolution on Brexit, and that they should make the most of fixed lending levels now, with further interest rate increases likely” he adds.