First-time buyers are priced out as number of flats sold in London tumbles

London’s flats have decreased in sales as the prices are out of reach for ordinary first-time buyers, according to new research.

According to figures from Home.co.uk, which analyses data from the Office for National Statistics and property portals, which the number of apartments sold in the capital fell by 47pc in July compared to 12 months previously.

The number of detached properties sold in London fell 5pc in 12 months to July this year, with sales of terraced houses down 8pc. This comes amid a general slowdown in the level of transactions across the country, and particularly in London.

According to the Land Registry, the average price of a flat in London increased by 3.9pc in the 12 months to July to £434,587. The price growth of flats is outstripping all other property types across the country, partly due to a lack of supply, being led by the rises in the capital.

With the slowdown in sales signals that affordability has been crunched and many first-time buyers, who would typically purchase these properties, are sitting on their hands and waiting for a correction in prices. 

While the Government’s Help to buy scheme has allowed many first-time buyers across the country to get on the property ladder with a 5pc deposit, the take-up in London has been far lower. The threshold of £600,000 means that many newbuild properties are too expensive to qualify and analysis by the BBC earlier in the year found that while Help to Buy is used to buy one in three new-build homes outside London, in the capital it is just one in 10.

Other natural buyers of these properties, buy-to-let landlords, have also been squeezed by changes to the tax regime and many are sitting out buying opportunities or selling up their portfolios.

Lucy Pendleton, the founder of estate agency James Pendleton, said: “Solid numbers of people are showing some reluctance at current prices and signaling to all the other market participants they can’t transact unless they come back down to earth.” 

A correction could soon be coming: data from Acadata and LSL property services found that prices in London have fallen the most since the financial crisis. Average property values have fallen 2.7pc in the year to September, the most since 2009.

 

Prices for London Luxury homes predicted to stay flat until after Brexit…

According to Savills, Brexit uncertainty and tax changes weigh on the market. With central London luxury homes are forecast to fall 4% this year and will flatline for nearly two more years.

Sellers in London are being forced to lower their prices: the number of properties worth £1m or more where the asking price has been cut nearly doubled in the first half of 2017 from a year ago. With a 3.2% in the first nine months of this year, and are 15.2% below their peak three years ago. Savills is forecasting 20% growth in central London luxury house prices over the next five years, which is less than half the 52% long-term average seen between 1979 and 2014.

The City to lose about 20,000 jobs from its 350,000 workforces in coming years espects Savills, but believes London will remain a key global financial center and develop as one of the several European hubs for the growing tech sector. They also estimate there were 394,000 properties worth £1m or more across the UK in 2016, down 3.4% from the year before, although the number has more than doubled in the past decade. Almost two-thirds of those homes are in London and a further 21% in the south-east. In Kensington and Chelsea in west London, almost half of all privately owned homes exceed the £1m mark.

Looking beyond the price declines at the top of the market, bloated London property prices have been fuelling an exodus from the capital. The number of people in their 30s who are moving out to the commuter belt or further afield in search of more affordable homes rose 27% in the five years to the end of June 2016, according to official figures. 

Mortgage lending in August hit a one-and-a-half-year high, according to figures from UK Finance, the new trade body for the banking industry. Gross lending rose to £24.2bn, the highest since March 2016 when buy-to-let buyers rushed to complete before a hike on stamp duty, taking lending to £26.3bn. Before that, mortgage lending was last higher in April 2008.

 

Abbeywood where house prices are way below the London average and price growth is strong at the Crossrail hotspot!

Abbey Wood SE2 postcode has grown by an impressive 76 per cent in the last five years, but the average remains a relatively modest £309,560.

Buyers have been pouring into Abbey Wood in anticipation of next year’s launch of Crossrail — the Elizabeth line — which will cut journey times to central London by almost half an hour.

While the area is not a thing of beauty and boasts few amenities, it has streets of good-value period terraces where a three-bedroom house would cost £375,000 to £425,000. You could get a slightly dated purpose-built two-bedroom flat in Abbey Wood for about £250,000.

The research by Bairstow Eves, using Countrywide data, evaluated average prices in every postcode in London. Then, concentrating on the cheapest 25 per cent of postcodes, it analysed their one-, two-, and five-year price growth to establish the areas where prices are on the strongest upswing.

Bellingham and Catford (SE6), an area well-placed to link to Crossrail services via neighbouring Forest Hill, has performed almost as strongly, with prices up 71 per cent in the same period, to an average £380,641.

For buyers on really slim budgets the bargain basement postcodes are Thamesmead, just north of Abbey Wood, where average prices stand at £252,747, up 60 per cent in five years, and Dagenham (RM10) where prices have grown 66 per cent to an average of £270,878. The once-desolate Thamesmead Estate is currently the focus of a £1.5 billion regeneration. Housing association Peabody was granted planning permission for the first phase of its transformation of the area late last year. There are also plans to link it to the London Overground.

Predictably, none of today’s leading areas are in Travel Zones 1, 2 or 3, where  nothing qualifies as affordable. More than one in three are perched on the outer fringes of London – MitchamDagenhamHarold WoodWellingSuttonNortholtWest Drayton, and Uxbridge. Their low prices combined with good transport links have been tempting an increasing flow of buyers priced out of more central locations, pushing their prices upward.

NORTH LONDON
Nowhere in fully priced west London makes the good-value grade, but representing north London are 
Tottenham (N17), where prices have mushroomed 67 per cent to an average £347,486 — and where billions of pounds worth of regeneration money is being spent on new homes and facilities — and its near neighbour Upper Edmonton (N18) where prices stand at £316,045, up 66 per cent.

The location of London’s cheapest neighbourhoods is a bellwether for change in the capital,” said David Fell, research analyst at Countrywide, who believes that as these regeneration schemes take root further growth is likely.

Over the last 20 years the most affordable neighbourhoods in London have been pushed steadily outwards and eastwards as swathes of the inner city reinvented themselves. Some of the cheapest corners of the capital in the Nineties turned into the boom towns of the Noughties, changing beyond recognition in the course of two decades.

It’s likely to be a similar story for some of today’s cheapest neighbourhoods in London. The arrival of Crossrail and the extension of the Overground will soon plug swathes of south and east London into the rest of the capital. The prospect of these new links is already bringing a wave of new development to some of the furthest-flung corners of the city. Within a decade it’s conceivable that the capital’s cheapest neighbourhood could pop up in west London for the first time.”