Welcome to the ‘measured market’: what’s really going on with Camden property?

Camden house prices have rised 23.8 per cent compared to this time last year

Camden house prices have rised 23.8 per cent compared to this time last year - Credit: Getty Images/iStockphoto

Transaction levels across London have “fallen of a cliff”. We asked local agents what this means for Hampstead and Highgate - plus their tips for buying in this new ‘measured market’.

A recent report from Portico estate agents has been grabbing headlines with the news that transaction levels are 50pc lower than before the last financial crisis.

Transaction levels have hit a new low as Stamp Duty Land Tax changes combine with Brexit and Trump related uncertainty to choke the market.

“There’s no doubt that the volume of sales has fallen off a cliff,” says Mark Pollack, director of Aston Chase.

“There was a spate of activity in November, but we’re still talking about a handful of deals.”

James Morton, director of Benham and Reeves said:

“There have been some better signs in the last four to six weeks. There’s pent up demand from buyers and vendors are being more realistic from the outset.”

“We had a good first quarter but SDLT, Brexit and the Trump vote has created uncertainty and transactions are down.”

The latest Land Registry figures available show May as the worst month in terms of transactions for 2016, with only 98 sales going through. In February 2009, at the height of the financial crisis, transactions bottomed out at 89.

The extent to which transaction levels have fallen in the last few months remains to be seen, but it appears the Portico figures are not far off.

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“It’s clear that all across London we’re seeing an acute reduction in the number of transactions. About 40 – 60 pc as a rule of thumb,” said Mr Pollack.

Mr Morton said: “It’s not as bad as 60 pc, but at the higher end of the market it’s down 40 pc. The more expensive houses in Hampstead and Highgate have definitely been hit harder.”

He added: “Hampstead Village and the good parts of NW3, including Belsize Park, are actually pretty robust, but in the periphery areas they have suffered much more.”

Buying a house was never been a stress free affair, but for Londoners it has never been this taxing.

“It’s taken all of the impulse buyers out of the market. Now people need a clear, defined reason to move. Moving house used to be a national pastime, but it’s become a much more measured market,” says Mr Pollack, who described the effect of SDLT as a “sledgehammer blow” to the London property market.

“SDLT is actually a tax on London and the South East. If your house is worth £1.5 million in London you’re not living in a mansion – you’re not even living in a period home.

“It’s demoralising for everyone, not just estate agents.”

With no repeal planned for SDTL and political uncertainty unlikely to lift, it’s clear we are not out of the woods yet.

“People are sitting still. Transactions are down. Demand is down. The number of new properties coming to the market is down. It’s combined to create the perfect storm,” said Mr Morton.

“The full shock of Brexit hasn’t been felt yet, and with Article 50 still to be triggered there will be even more uncertainty before and after March.”

The-predicted Brexit Bounce has indeed come to pass, with international buyers taking advantage of the devalued pound to snag some bargains, but the benefits to the market as a whole are limited, whilst the domestic market has stagnated.

“The international market feels London has already peaked,” said Mr Pollack. “There’s a finite limit to the number of overseas buyers.”

Traditionally a reduction in transaction volumes precipitates a reduction in prices, so does this mean property prices in the area about to go down?

In a word, yes, but not because property is necessarily becoming cheaper.

Mr Pollack said he has seen price reductions of up to 20 pc over the past few months, but stressed this was in the cases where vendors had been “overambitious” in their pricing.

Mr Morton added: “In cases of 30 pc reductions overzealous agents and overambitious vendors were probably asking for 10 – 15 per cent too much to begin with.”

Tips for moving in a measured market:

DO: Really consider if you need to move. With SDLT now so high even if you are downsizing you might find yourself significantly out of pocket.

DON’T: Buy just anything, anywhere. Some micro markets in north London have remained resilient despite the storms. A cute cottage in Belsize Park or Hampstead Village is a much safer bet than a larger house in a periphery postcode, no matter how swish it might look now.

DO: Take your agent’s advice about pricing. Don’t be too ambitious or you’ll be forced to take an embarrassing reduction in price.

DON’T: Wait too long if you really do have to move. We haven’t even seen the full effect of Brexit yet and with Article 50 still to be called we’re headed for even more uncertainty in the market around March 2017.