An estate agency claims there is a “contagion” spreading across the prime London housing market with sales reduced drastically thanks to stamp duty and increasingly because of mortgage constraints.
The agency Portico says the reduction in transaction volumes has now spread across 31 out of the 32 boroughs with London-wide sales down 18 per cent on this time last year.
Only Barking & Dagenham has been seeing a rise in deals.
This transaction-drop includes boroughs where lower average prices mean stamp duty changes have actually had only limited impact, notably in Greenwich (down 24 per cent), Merton (down 22 per cent) and Hackney (down 20 per cent).
The agency says what it calls “the killing off of the interest-only mortgage market” is responsible for damaging the market in areas where there is little impact from the stamp duty changes introduced last December.
According to the Council of Mortgage Lenders, in 2009 some 30 per cent of new house lending was with interest-only mortgage products.
Yet in 2014, this had reduced to only three per cent. This, rather than the stamp duty changes, has had a substantial impact on mid-market transaction levels in London suggests Portico.
“With volumes across London now down 18 per cent, and the recent policy changes now firmly entrenched, the capital’s housing market is literally grinding to a halt. The law of unintended consequences may well be relevant here” says Robert Nichols, Portico’s managing director.