The closure of Foxtons’ Park Lane office and five other branches in the capital are merely the start of things to come warns leading investment consultancy London Central Portfolio.
The reason, it says, is a slump in transactions in Prime Central London - they fell to just 3,671 in the year to October - that’s just above 70 sales a week, representing a 15.4 per cent collapse in one year and a huge 40 per cent drop on 2014.
It means the market’s performance now is worse than during the global financial crisis.
“Transaction levels continue to have a very real effect on London estate agents” says the latest LCP report, which also refers to a market analysts’ report suggesting that 27 per cent of High Street agents are struggling to survive.
“As the PCL market has seen the most dramatic fall in transactions across the UK over the last few years, it is likely that it will not be the last we hear of this in the coming months” warns LCP.
However, the consultancy says that at last there are some signs of increased activity in PCL “as price discounting seems to have reached a level which investors are finding sufficiently compelling to re-enter the market.”
LCP suggests that the average annual prices in October in Prime Central London - excluding new builds - is now £1,870,774; that’s actually 4.2 per cent more than a year ago.
Across Greater London the average price now stands at £631,987 - “prices on an annual basis have stalled completely with an increase of 0.8 per cent” says LCP.
Transactions in Greater London are at their lowest levels for some years and now stand at 89,096. This is a fall of 5.6 per cent over the year and 25 per cent down on 2014. Sales of new builds have also fallen a massive 15.5 per cent over the year.
“No doubt, this a contributing factor to the strife that estate agents are currently having to weather. Countrywide, the UK’s biggest estate agency, has seen their share price fall by 98.5 per cent over the last four years” explains the latest LCP report.
“On top of this, there are still many hurdles to jump in the Brexit negotiations and there is still no final road map on the table. This is not the news that the market needed to hear and it is hard to see any light yet at the end of the tunnel, with so many vested interests at play both in the UK and EU.”
The consultancy says it is unlikely that any significant market reversal will be seen until there is more clarity over Brexit.