More properties have been withdrawn than sold in Hampstead
- Credit: Archant
Across prime London more properties have been taken off the market without finding a buyer than have been sold as vendors wait for prices to rise again
More properties in prime areas such as Hampstead have been taken off the market without finding a buyer than sold so far this year.
58 per cent of properties removed due to vendors withdrawing, with the remaining 42 per cent taken off the market having been sold according to data from LonRes.
As well as Hampstead, the areas covered in the data stretch from Kensington and Chelsea to Canary Wharf.
Until late 2014 the number of sales in prime London exceeded withdrawals. In the same period of 2014 only 34 per cent were withdrawn and 66 per cent were sold.
This gap narrowed towards the second half of the year, suggesting buyers sensed the market had peaked. With buyers unwilling to pay vendors’ asking prices, the latter began to withdraw their properties.
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The volume of properties withdrawn is a barometer of the state of the market. If the market is rising there are fewer withdrawals, although properties may take longer to sell as vendors hold out for a higher price. When prices start to fall, vendors may withdraw and wait for prices to rise again.
Properties in the multi million pound brackets are struggling to sell at full asking price in the current climate. This £4.95 million property on Gloucester Gate, Regent’s Park, had £1 million taken off the asking price recently in an attempt to attract a buyer.
This high proportion of withdrawals s suggests a lack of urgency, explained LonRes head of research Marcus Dixon. “Unlike previous downturns in the central London property market few in prime London are forced sellers,” he said.
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With the cost of holding a property and mortgages at record lows, vendors with no urgent need to sell have opted to withdraw rather than reduce their asking prices.
“This has meant prices have remained relatively stable but transactions have fallen,” Mr Dixon added.
The data indicates that two recent changes to stamp duty have played a part in the swing from higher sales to higher withdrawals.
When the higher rates of stamp duty for homes over £1.5 million were introduced in December 2014 the ratio of properties sold to withdrawn reached parity.
When the 3 per cent surcharge on second homes was introduced in April there was a brief spike in sales getting in before the rates rise before withdrawn properties overtook the number sold.
These new market conditions may favour more old fashioned ways of selling property.
Director of LonRes Anthony Payne commented: “With properties in central London now more likely to be withdrawn than sold, the traditional estate agency model, rather than the online model with up-front costs, is better suited to vendors who are looking to test the market and may change their decision to sell”.