House prices are falling in parts of London for the first time in two years as the capital’s “sealed bid frenzy” comes to an abrupt halt, a report says today.
Tougher mortgage rules, fears of an interest rate rise and a jump in the value of the pound – making London more expensive for foreign buyers – have all combined to take the steam out of the market.
Across London as a whole, prices did not rise at all in July and fell “in localised markets where demand has cooled the most”, according to property data firm Hometrack.
The biggest falls have been for larger properties in W and SW postcodes in central London, according to Hometrack’s director of research, Richard Donnell.
He said buyers were being far more cautious after a long run of post-recession price rises that reached a peak earlier this year.
He said: “The housing market runs in cycles and it has been such a strong upward trend everyone is now thinking, ‘it can’t keep heading for the stratosphere. Do I want to get into a sealed bid situation and pay 15 per cent more than I was planning to?’”
The slowdown in central London has been exacerbated by a “glut” of properties on the market priced at more than £2 million.
Hometrack said prices are rising in just 12 per cent of London postcodes, compared with 86 per cent as recently as February.
The average time a property has been on the market has lengthened from 3.4 to 4.3 weeks since May, while average sale price as a percentage of asking price has fallen from 99.2 per cent to 97.5 per cent.
The slowdown in central London has been exacerbated by a glut of properties on the market at more than £2 million.
Property buying agency Black Brick said there are currently 1,968 properties with “For Sale” boards priced at £2million and above, more with the 1,657 properties sold in that bracket in the whole of 2013.
Managing partner Camilla Dell said: “It has started to become more of a buyers’ market for the first time in a long time, particularly in the super prime upper end of the market - £10 million and above.
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“Indeed, we’re currently in the midst of a search for a client looking for a house in Mayfair or Belgravia from £20 million up to £100 million and there are well over 20 houses for sale in this price range. If there are sanctions against Russia which mean that certain Russians might be exiled from the UK, this could create even more supply on the super prime end.
“Many high end developers are now struggling to find buyers for their trophy mansions, and are having to become more realistic with their asking prices. As such, I believe we could see significant price drops at the super prime end of the market. Indeed, one house in Mayfair has already had a significant price reduction from £120 million down to £95 million.”
