Is the property market in north London (and beyond) on the turn?
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Are we entering a property downturn? The signs coming from Hampstead certainly point to yes.
“The market is on the turn”, says the Nostradamus (albeit with a more solid success rate) of property.
‘The man who predicted the top of the property market in 2007’ as he’s known in property circles, buying agent Henry Pryor has been proved right in his predictions on the market time and again – history doesn’t relate if he’s ever proved wrong but let’s assume not.
So why is he making these dastardly claims? It’s not just a move designed to exacerbate the woes of London selling agents in this fractious market but is, in fact, based on hard data.
More than one third of all properties in Hampstead sold between January and March this year had an agreed sales price more than 10 per cent lower than the initial asking price, according to the latest Lonres market briefing.
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This is more than double the number of properties sold with large reductions in the same period in 2014.
In even higher value areas than Hampstead, this percentage is even higher, with 56 per cent of properties sold in Marylebone and Mayfair in the same period seeing their sold prices slashed.
As Pryor points out, there may have been a transaction surge in the first months of the year with investors rushing to beat the stamp duty surcharge, but people were still selling for less than the asking price.
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Some high end selling agents were unwilling to comment for this story, which could be interpreted as speaking volumes in itself. As Pryor says, they have a vested interest in painting an optimistic picture.
Philip Green of Goldschmidt & Howland, says: “We’re seeing price reductions, no agents can deny that, and there’s definitely been a softening of appetite from buyers. Viewing levels are lower than they’ve been for years. We’re very fortunate to be doing more than most.
“Valuations are also all over the shop. There are houses for sale at less than £1,000/sq ft in Hampstead and houses for £2,000/sq ft.”
Green cites the forthcoming EU referendum on June 23 as one reason for international buyer jitters but he is not convinced that this is the only reason for the slowing market. He points to stamp duty hikes in successive budgets, changes to taxation for landlords and greater regulation on offshore investment as further and potentially more lasting contributing factors.
“The regular Hampstead market has seized up,” agrees Pryor. “If you’ve got to sell because of one of the ‘three ds’ [debt, divorce or death] you want to be pitching it 15 per cent below where you were 12 months ago. Personally I’d be pitching 20 per cent below.
“As uncertainty grows the spread of value widens so people become less confident of what property’s worth. If you ask the typical estate agent how confident they would be in their valuation he’d probably say he could predict 10 per cent either way, which is a 20 per cent spread. 20 per cent on a million quid means if you get it right, you might sell for £1.2 million, or you might buy for £800,000.
“In a bull market, valuers would expect to be 5 per cent either way and could really expect to be pretty much spot on.
“It’s a market in which you can still trade but it’s incredibly complicated.
“Readers of the Ham & High should be confident that they can still transact but it’ll definitely be tricky, at least until the 23rd June.”