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TODAY'S OTHER NEWS

Agent reveals true scale of London market collapse - but it may be over

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.

  • Simon Shinerock

    The market will never fully recover while stamp duty is as high as it is, I’m sure Trevor knows this. The problems are compounded because you can’t get a mortgage on tax and the cost of a sideways move is prohibitive,

  • Paul Barrett

    Brexit has nothing to do with the travails of the London property market.
    It is the threat of a Corbyn Govt that is of most concern.
    The London market will remain moribund until the outcome of the GE.
    If Labour win it will remain moribund until they lose power.
    London property wealth will be taxed to the maximum by a Marxist Labour Govt.
    Think increased SDLT and a mansion tax.

    James Robinson

    Well said Paul, over taxation has already stagnated the property market and precipitated a collapse in tax revenue. We need a new political party as the current crop do not deserve the countries mandate. Shall we start one?

     
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    That and Stamp Duty agree.

  • Paul Barrett

    @jamesrobinson

    Yep totally agree that it is not a good idea to deter those rich from buying property in the UK.
    The normal taxpayer doesn't give a stuff if the rich buy in London.
    It is recognised that it is a market for the rich.
    Nothing wrong with that.
    The rich will always be the only ones buying Central London Property.
    They provide an awful lot of work for those who service their needs from the EA to the plumber!
    Indeed if I am to coin a phrase phrase I am incredibly relaxed about the filthy rich.
    Penal SDLT to deter the rich is bad for the economy in general.
    To say that building lots of expensive apartments in London is wrong when there are lots of London homeless is a ludicrous statement.
    Developers won't bother building social housing on prime London land.
    Indeed the homeless should not be housed in London.
    They should be deported up North where there is a surplus of rental housing and also housing for sale.
    Naturally I am extremely envious of the rich as unfortunately I'm not one of them!!!
    But fairly taxed rich are needed.
    The penal additional SDLT for the rich is simply unfair on the rich.
    Even they have their tipping point at which they refuse to buy.
    I don't blame the rich at all for not wishing to pay ridiculous amounts of SDLT.
    It is a well known fact that the less a tax is the more it rakes in.
    So reducing SDLT will actually get the property market moving again and will benefit everyone especially HMRC who will receive more SDLT at lower rates than what they are receiving at higher rates.
    London is an international city.
    We certainly don't want the feckless HB tenants being paid to stay in London.
    I would clear the London homeless and deport them up North.
    HB is far cheaper there and everyone could be housed.
    But the rich will remain distanced from the London market while the ridiculous penal SDLT rates persist.






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