Summary:
- London asking house prices decrease by 3%
- Proportion of first time buyers remain at a low of 19%
- Buyers typically achieving 4.5 % reduction of asking price
- Buyers sitting on hands during electoral campaign
Reductions in asking price to achieve a sale has increased to 4.5% as election jitters begin to take hold and homebuyers are increasingly reluctant to commit themselves to a property transaction. The average London house price is now £221,256 from £228,150 last month. However this is predicted to be a temporary glitch in confidence as the market is forecasted to bounce back post election.
Russell Jervis, managing director of haart estate agents notes that the decline in the asking price and the increase in the amount being reduced from the asking price is likely to be related to the forthcoming election: “Impending general elections fuel uncertainty. Homebuyers are anxious about purchasing properties as they are wary of electoral outcomes and the looming tax rises that will further dent their budget. However this is in fact a great time for buyers to purchase a property as historic data tells us that property prices will bounce back post election.”
The change in the amount that London sellers have to reduce their asking prices to achieve a sale is a strong indication of the market’s stability and how it will perform for the rest of the year. In March asking prices has dropped to 4.5 %, but is still fluctuating in the 3-5% range which is where it has remained since June 2004.
Russell Jervis, managing director of haart says: “It is still a buyers market. Vendors are finding it increasingly more difficult to sell their properties. This is not only reflected by the increase in reductions in asking price to achieve a sale but also the number of viewings required to secure a sale.
“This time last year it took an average of nine viewings to make a sale and you could expect three or four offers, now 16 viewings are normal. Sales that are being agreed today are sealed on properties where vendors are sensible about prices.”
Although the stamp duty threshold was revised last month, not surprisingly the proportion of first time buyers in London has remained at a low of 19%, dipping by 5% from this time last year in March 2004.
Russell Jervis, managing director of haart estate agents comments: “The Chancellor’s decision to raise the initial threshold to £120,000 is a total cop-out. It has been completely ineffective in encouraging first time buyers to the market. In London the average value for a property is £221,256. It is virtually impossible to buy a place for £120,000. First time buyers are struggling to raise sufficient funds for a deposit, this stealth tax only contributes to the lack of first time buyers.”
Commenting on the prospects of the London market over the coming year, Russell Jervis says: “We are still seeing the re-adjustment of prices from last year. Sales that are being agreed today are on properties where the vendors are sensible about prices. It is very common for market confidence to dip pre election but it is often a very temporary dip that swiftly picks up once the dust settles post election. We therefore predict a much more buoyant market in the next quarter.”
On average the reduced discounts on the asking prices is 4.5% however in some areas there were high reductions in average asking price, such as in South West London, where there is a 7% reduction in asking price indicating that in some areas there will be further adjustments in price levels.
