Prices and transaction volumes have both fallen again in Prime Central London according to the index produced by Central London Portfolio, an investment consultancy.
It says: - average prices in June (excluding new build) in PCL now stand at £1,754,317 which is 8.2 per cent lower than a year ago and 6.9 per cent down from the previous quarter;
- annual transactions in PCL have fallen 8.5 per cent to levels last seen during the global financial crisis;
- new build transactions have dropped 17.3 per cent over the past year, although new build prices in PCL have hit a record high of £3,209,089;
- average prices in June, excluding new build, in Greater London now stand at £628,807, which is an annual increase of just 0.6 per cent;
- in Greater London annual transactions fell by a further 8.0 per cent in general, and down 12.6 per cent amongst new builds;
- but in Greater London, too, new build prices reached a record high of £755,553.
Naomi Heaton, chief executive of London Central Portfolio, says whilst there was an increase in the proportion of higher value transactions in Prime Central London during the first part of 2018, this surge appears to have dissipated.
“With current residential tax policies and the lack of a defined plan for a post-Brexit UK contributing to economic uncertainty, it appears that only those who have to move are doing so. Falling prices will only exacerbate this as sellers are not motivated to move if they see the value of their home decline” says Heaton.
She adds that soft prices and a general trend towards down-valuing properties could also have a concerning impact on the government’s Help to Buy Scheme, which has enabled buyers to take a 95 per cent loan.
“Existing owners may now find they are in negative equity when it comes to re-mortgaging their homes, with serious repercussions” warns Heaton.
Looking at the national landscape, Heaton says: “The government is unlikely, and probably unable to, reverse the recent tax changes, given the political consequences. Therefore, it looks as though it will adopt a ‘wait and see’ attitude for the time being, although the economic consequences of falling transactions and a reduced tax take are beginning hit home.”