Founder & CEO
For many years, London has seen property growth dwarf the UK average. 2016, may finally see a change in this theme. According to Nationwide, prices in the capital rose at a rate of 3.7% – 0.8% less than the rest of the UK. ¹
Transactions in London luxury property (costing more than £5m), in the 6 months from May to October fell 60%. While transactions for properties valued £1m – £5m fell 33% over the same period. In a world of low interest rates and cheap credit, how can these transaction rates be falling? One reason is the stamp duty tax rise. If you are a foreign buyer looking to buy a holiday flat in London, the higher stamp duty may put you off. ²
The big question for first time buyers is – how has this affected lower end property?
Sadly, most first time buyers aren’t buying at these lofty prices, so can’t take advantage of this transaction turbulence.
For London, there is a glut of luxury properties giving buyers strong negotiating power to drive down prices. This disequilibrium hasn’t filtered down to the first-time buyer yet. Prices of smaller properties, with two bedrooms or less, grew at twice the rate of the rest of the market. ³
The activity in the first-time buyer market actually grew by 13% ³ during the first nine months of 2016 – contrary to the more expensive markets. The first-time buyers’ market was the only one to show growth in December. ³ The average age of a first-time buyer is now 33. ³
The hope for first time buyers, is simple – that the London market can falter and with the downward pressure from more expensive properties.
1 – https://www.theguardian.com/money/2016/dec/29/house-prices-rise-by-45-in-2016-says-nationwide
2 – https://www.ft.com/content/5e3fc568-bd61-11e6-8b45-b8b81dd5d080
3 – http://www.homesandproperty.co.uk/property-news/buying/first-time-buyers/uk-house-prices-firsttime-buyer-homes-are-rising-twice-as-fast-as-larger-homes-a106361.html