Property prices in Greater London have breached the £600,000 mark for the first time, according to LCP’s Land Registry analysis.
The continued upward trajectory for property prices in Greater London has resulted in swelled property prices driven by record lows in mortgage rates and beneficial falls in basic rate Stamp Duty.
England and Wales, however, is showing no signs of the recovery being enjoyed by Greater London. Outside the capital, prices have fallen 0.87 per cent over the preceding quarter, with average prices now standing at £235,844. Sales volumes have also fallen 4.5 per cent versus the previous quarter.
This must give cause for concern, given recent Government stimuli initiatives, both to reduce the Stamp Duty burden for 90 per cent of buyers and augment first time buyer numbers.
Naomi Heaton, CEO of LCP, comments: “Whilst making for somewhat staggering reading, the increase in sales is not actually surprising. Buyers, wanting to access the PCL market, rushed in during Q1 to beat the 3 per cent Stamp Duty deadline which created an uncharacteristic surge. This one-off anomaly is likely to be steeply eroded next quarter, magnifying the contraction in sales already anticipated across the rest of the year.”
According to LCP, prices will also soften as transactions plummet following the Q1 stampede and tax changes continue to rock the upper-end of the market. This is being compounded by pre-referendum jitters and global economic uncertainty, as international investors face struggling stock markets, falls in oil prices and an unsettled Chinese economy. However, a slightly softer pre-Brexit market offers plenty of opportunity for investors, if sellers are looking for a speedy exit.
Heaton comments: “As has been demonstrated time and time again, Central London slows down in the face of investor uncertainty; for example after 911, during the Iraq war and in the face of a weak stock market in the early 2000s. All the evidence, however, suggests that the market rallies quickly thereafter, particularly at the lower price points. In 2010, prices bounced back post credit crunch by 22.7 per cent, following a fall of 16.3 per cent the previous year. To capitalise on the current conditions, purchases should be focused on the sub-£1m sector of the PCL market. This has been far less affected by recent tax changes and future price growth is expected to be robust.”
