One of the capital’s most outspoken estate agents at the upper end of the market has given eye-watering statistics to show the extent of the sector’s problems in recent years.
Trevor Abrahmsohn, who sells luxury property in areas of north London through his Glentree Estates agency, says that in the market for homes above £1m in London, properties have fallen in value by at least 35 per cent over the last five years.
This is down, he says, “to a fetid concoction of Stamp Duty hikes, the Referendum, Non-Dom tax changes and the fall-out from Brexit.”
He adds: “Transactions are down by 60 per cent and up until the New Year, estate agents were complaining about the lack of activity, dearth of deals and the general reluctance of purchasers to make a commitment. Meanwhile, astute buyers indulged in extended ‘wall sitting’, as the Brexit negotiations ricocheted back and forth, without hitting a target.”
Abrahmsohn says that following last year’s correction in the equity markets many “less courageous” purchasers avoided committing to deals - a phenomenon continued during this year’s long-running Brexit debates at Westminster.
But that was then. Now, in line with some recent analyses of the capital’s market, Abrahmsohn believes there is light at the end of the tunnel.
“The chattering classes - that is, the cognoscenti amongst estate agents - is that the number of potential buyers has increased by 50 per cent whilst the supply of property has reduced by the same amount. Let me tell you, that it doesn’t take Warren Buffet to work out that when you have pent-up demand and a shortage of supply, the outcome will be higher values” he writes in his agency’s latest blog.
“My view is that this applies to the market between £1m and £3m. I don’t believe that it will spread yet to the market above £5m and £10m, since there is still an excess of supply and limited demand in this sector, although the stock in Central London is still drying up.
“All this tells us is that we could be on the cusp of a changing market, where the power of negotiation transfers from the purchaser to the seller, for the first time in five years.”
His comments echo those from the hitherto-pessimistic London Central Portfolio, an investment consultancy that in recent months has been voicing concern at the state of the high value market in prime parts of the capital.
LCP says that transactions in prime central London have seen an almost 25 per cent increase over the last quarter, translating into a spike in prices of 13.2 per cent.
The consultancy cautions that this may have been inspired by a wish to beat the ‘Brexit deadline’ that existed at the end of March when the UK was scheduled to have left the EU - however, with Brexit back in the headlines and the departure date extended until October, LCP warns that prime parts of the capital may not yet be out of the woods.